Audit forces Australian private-credit funds to halt after valuation cuts

Metrics Credit Partners halted three funds listed on the Australian Securities Exchange after a KPMG audit slashed asset valuations². Bloomberg reported that the Australian private credit firm cut the value of three funds¹. The West Australian said the suspensions followed a delayed KPMG audit that prompted the value cuts and exposed private credit risks³.

The Australian wrote that signs of a regulatory reckoning for the private credit industry are reaching the firm’s Martin Place headquarters². The suspensions came over the weekend³.

Why it matters to investors

Listed private credit funds are priced off marks rather than a continuously traded market, so an auditor’s revision can force a trading halt rather than simply move a price^2,3. That is the mechanism on display here, and it is the reason valuation practice in the asset class is drawing supervisory attention.

The US Securities and Exchange Commission published a statement on fair value measurement and disclosure considerations for private assets, saying the reminders in it are relevant to all registrants with exposure to private credit assets⁶. The statement is not itself a rule or regulation⁶. Private Debt Investor reported that the National Association of Insurance Commissioners has defended its regulatory model following probes⁷.

What to watch

Flows have been going the other way. Redemption pressure in major private credit funds aimed at retail investors eased in September as withdrawal requests declined and returns held up, according to AMWatch⁴. The same publication reported that wealthy investors are turning to net asset value loans as private equity payouts slow, a route described as risk-efficient by one private banking executive⁵. AMWatch reported that returns held up alongside the fall in withdrawal requests⁴. Private Debt Investor separately noted that time spent on the road raising money has been increasing since 2021⁷.

Two threads to follow. The first is whether other managers face similar audit-driven revisions once their own accounts are signed off^1,2. The second is where the credit is being packaged: Bank of America has argued the next wave of AI-related debt could run through collateralised loan obligations, including private-credit CLOs and infrastructure, and that the edge will come from disciplined underwriting and knowing exactly where the collateral risk sits⁸. Whether the SEC’s fair-value reminders change disclosure practice is the slower test⁶.