Australia Keeps Raising the Operational Bar for Private Credit

Australia’s private credit market is growing quickly. ASIC’s latest message is straightforward, valuations must be current, properly supported and capable of being explained. For fund managers and administrators, that means stronger records, clearer responsibilities and fewer gaps between the loan file and the reported NAV.

Private credit has moved well beyond a niche source of finance in Australia. ASIC has cited an estimate of about A$200 billion for the Australian private credit sector, while noting its growing role alongside traditional bank lending. More managers, platforms and investors are participating. That growth is useful to borrowers and the wider economy, but it is also bringing the sector’s operating practices under closer examination.

ASIC’s recent work does not suggest that private credit is inherently problematic. The concern is whether governance and controls are keeping pace with the market. Its surveillance found considerable variation in practice, with material improvement needed in areas including valuation, conflicts, fees, disclosure and risk management.

The latest message is about evidence

Ahead of 30 June 2026 valuations and reporting, ASIC called on private credit funds to ensure asset values were current, accurate and supported by credible evidence. It also said that improvement since its earlier surveillance had been uneven.

That distinction matters. A valuation policy can describe a sound process on paper. The fund must still be able to show how the process was applied to each material loan, what information was available, how changes in the borrower’s position were reflected, who reviewed and challenged the assessment, how conflicts were handled and why the final value was reasonable at the reporting date.

For managers, trustees, responsible entities and administrators, the practical question is no longer simply whether a policy exists. It is whether the fund can show how the valuation decision was reached.

Why private credit valuations require more than a year end exercise

A private loan does not usually have a readily observable market price. Its value depends on information that develops throughout the life of the investment, payment performance, covenant compliance, borrower results, amendments, waivers, security, priority, restructurings and changes in expected recovery.

Those events often sit across different teams and systems. The investment team may hold the latest borrower information. The finance team may maintain the accounting record. A valuation committee may approve the mark, while the administrator calculates NAV and prepares investor reporting. If the hand offs between them are incomplete, the final number can appear precise without being fully supported.

A stronger process connects the loan file to the valuation methodology, review and approval. It also keeps unresolved issues visible rather than allowing them to disappear into reporting period adjustments.

Seven areas private credit managers should review

The administrator’s role is changing

A fund administrator does not replace the manager’s credit judgement, the valuation function or the governing body’s responsibilities. But accurate NAV and investor reporting depend on complete and timely information about the loan portfolio. That makes administration an important part of getting the numbers right.

There needs to be a clear flow of information from the loan file into the fund accounts. In practice, that may include reconciling loan sub ledgers to accounting records, validating cash and PIK interest, tracking fees and amendments, documenting overrides, and checking that approved valuation decisions flow consistently through NAV, financial statements and investor reports.

This is where private credit administration differs from processing a conventional portfolio of market priced assets. The administrator must understand the events behind the accounting entries, while remaining clear about which decisions belong to the manager, valuation committee, trustee or responsible entity.

What managers should review now

• Map responsibilities across the governing body, manager, valuation committee, trustee or responsible entity, administrator and auditor.
• Set a loan level data standard covering payment status, covenants, security, amendments, waivers, impairments and valuation inputs.
• Run a reporting date readiness review before the formal valuation and NAV process begins.
• Test whether fee, income and performance information is consistent across governing documents, accounting records and investor communications.
• For open ended funds, compare redemption terms and liquidity tools with the actual duration and liquidity of the loan book.
• Maintain an exceptions register so missing data, unresolved breaks and control issues reach the right decision maker before reporting is finalised.

Why this matters beyond Australia

ASIC’s work is Australian, but the operating themes are relevant across APAC. Institutional investors are unlikely to apply materially lower diligence standards to comparable private credit strategies elsewhere. They will increasingly expect managers to explain not only the investment thesis and reported return, but also the valuation governance, portfolio monitoring and evidence supporting the numbers.

The operational bar is therefore rising before any single new rule changes the market. Managers that keep a complete record of what is happening across the loan portfolio and connect it clearly to valuation, accounting and reporting will be better placed to respond to regulators, auditors and investors as the asset class grows.