Metrics Credit Partners Halts Three Funds, Slashes Asset Values After Audit Disagreement

Metrics Credit Partners, one of Australia’s largest private credit lenders, suspended trading in three of its ASX-listed funds on Monday and announced substantial writedowns to their asset values. The move came after its auditor, KPMG, challenged key assumptions used in the firm's preliminary financial reports.

In filings with the Australian Securities Exchange (ASX), the firm, which manages approximately A$40 billion ($28.09 billion), said KPMG had made "different decisions" regarding inputs and probability weightings compared to those initially used by Metrics. This prompted a trading halt for the Metrics Real Estate Multi-Strategy Fund, Metrics Income Opportunities Trust, and Metrics Master Income Trust before the market opened.

Valuation Cuts Detailed

The auditor's revised assessment resulted in significant reductions to the net tangible asset (NTA) values for the funds. According to the company's statements, the markdowns were as follows:

• Metrics Real Estate Multi-Strategy Fund: NTA cut by 12.16%, from A$2.53 to A$2.22 per unit.
• Metrics Income Opportunities Trust: NTA cut by 10.08%.
• Metrics Master Income Trust: NTA cut by 1.99%.

Metrics stated the large markdown for the Real Estate fund was primarily due to a lower fair value assessment of its unlisted commercial real estate equity investments. The firm noted that in finalizing the audited results, "greater weight was given to downside scenarios and less favourable potential outcomes."

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Sector Under Scrutiny

The announcement arrives amid heightened regulatory oversight of Australia's rapidly growing private credit sector. Last week, the country's corporate regulator issued a warning about unrealistic valuations and poor governance practices in the industry, signaling potential enforcement action.

The market is also on edge following the recent collapse of property developer Bathla, which owed A$3 billion to around 40 lenders. Metrics confirmed it has no exposure to Bathla.

Metrics said the audit also led to higher provisions for potential loan losses across the three funds. This reflected factors including "interest-rate and macro-economic conditions and heightened regulatory expectations as applied to specific assets and the portfolio."