Why private credit has some concerned about the next GFC | The Business | ABC NEWS
Private credit lending outside the banks is a growth industry, with high interest rates and potentially high risks.
Corporate regulator ASIC has sounded the alarm after disastrous collapses in the US credit sector.
In Australia, there’s currently $250 billion worth of private credit loans. Most lending is in property, and the regulator is warning a housing crash could spark a private credit financial shock.
ASIC Commissioner Simone Constant says private credit is at a size and breadth that hasn’t been seen before, and hasn’t been tested in a downturn, “so there would be bumps” if there were to be a private credit collapse.
And it’s Australia’s $4.5 trillion superannuation sector that has the regulator worried.
ASIC is fearful a property crash could sideswipe the local private lending sector.
It’s told the ABC millions of superannuation accounts could wear some of the losses.
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