The state of the debt fund market

Debt Funds

By Deepesh Daya | Nexus Law Group Consulting Principal – Melbourne

I have met recently with a number of debt fund providers, niche property lenders and market participants.

These are some of my (and other’s) observations about the current state of the market:

  1. There is A LOT of capital (domestic and foreign) coming into the market to establish debt funds and other alternate lending vehicles.
  2. Some participants are familiar with the Australian market (property development in particular) however many are not. For those that aren’t I hope that the fund managers are applying sound credit analysis to the projects/businesses being funded.
  3. Many alternate lenders are not being advised by specialist finance lawyers and are not using adequate documentation – leading to increased risk.
  4. Interest rates among debt funds and alternate lenders are reducing due to increased competition in this sector.
  5. Over the next few years we will likely see (a) further pressure on interest rates in this sector; and (b) consolidation due to failed funds and acquisitions by larger greater capitalised funds.

What are you seeing in the market… ?

If you have any questions, contact Deepesh Daya at [email protected] or call +61 (3) 9098 0437

This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.