On Monday morning in Sydney, the trustee of three listed private credit funds managed by Metrics Credit Partners told the Australian Securities Exchange that their auditor had found problems with the numbers, that the funds were worth less than they had said in August, and that a clean audit opinion was expected on Wednesday.
On Wednesday the auditor, KPMG, said it was not in a position to give one.
By the end of that day the unlisted funds that sit underneath all three listed vehicles had stopped publishing their net asset values and stopped processing applications and redemptions. The distribution reinvestment plans of two of the listed funds, MXT and MOT, were suspended. On Thursday ASX Supervision said the three would stay off the board under Listing Rule 17.5, which applies when a company has not lodged its accounts, until they do.
Metrics manages about A$40 billion, Reuters reported. It is one of the largest non-bank lenders in a country whose private credit market grew up lending to property developers when the banks stepped back. What its filings this week show is less a collapse than a disagreement about a number, and a demonstration of who had been closer to the right one.
Three writedowns, three different sizes
The three funds were cut by very different amounts. The figures below are net tangible asset backing per unit as at 30 June, first as reported in the preliminary results on 31 August and then as expected after KPMG's audit findings.
- Metrics Master Income Trust (MXT), the most loan-heavy of the three: $2.00 to $1.96, a cut of 1.99 per cent.
- Metrics Income Opportunities Trust (MOT): $2.15 to $1.93, a cut of 10.08 per cent.
- Metrics Real Estate Multi-Strategy Fund (MRE): $2.53 to $2.22, a cut of 12.16 per cent.
The filings break each cut into parts, and that breakdown is the most useful thing in them.
In MXT, almost all of the four cents came from higher provisions against individual loans. That is what a reader would expect from a fund built to lend.
In MOT, provisions against loans accounted for three cents of the 22. Thirteen came from a lower fair value on "equity and equity-like investments in respect of private equity". Another five came from equity in commercial real estate.
In MRE, one cent of the 31 came from loan provisions. Thirty came from what the filing calls "a net reduction in fair value" of commercial real estate equity and equity-like investments, which it describes as co-investments alongside developers in projects.
So the largest writedowns at a private credit manager came, in the end, mostly from the parts of its funds that were not credit. MOT's own filing says its look-through portfolio is now 66 per cent debt and 34 per cent equity, against 63 and 37 before. The fund's documents allowed those holdings, and the filing says the shift reflects lower carrying values, not a change of strategy. But an investor who bought a listed income trust for monthly distributions from loans was also holding a slice of development equity, and that slice is where the valuation argument happened.
What changed, in the filings' own words
The trustee's explanation is the same in all three announcements. Private-market investments "do not have readily observable market prices", their measurement "involves significant judgement", and "different weightings of the available evidence, can produce different valuation assessments." For the property and private equity holdings, the MRE and MOT filings say that in finalising the audit "greater weight was given to downside scenarios and less favourable potential outcomes", with revisions to expected cash flows, discount rates, capitalisation rates, development timeframes, end sale values and development costs.
Each filing adds that the changes "do not represent realised losses" or a conclusion that the downside will happen. And in each, the share of loans classified as watchlist did not move: 3.9 per cent in MXT, 4.1 per cent in MOT and 3.5 per cent in MRE's passive trust, with "no change in the exposures so classified".
That is a coherent position. Nobody has defaulted on anything new. The borrowers are where they were in August. What changed is the probability attached to the bad outcomes. Reuters reported that KPMG disagreed with assumptions in the preliminary accounts, including how fair value was calculated for unlisted property equity. On Monday, the trustee believed that disagreement had been settled at these numbers. By Wednesday it had not been.
The market had already done the arithmetic
The filings also include a chart of each fund's traded unit price beside its asset backing. Set those side by side and the story changes shape.
On 30 June, the date the accounts describe, MRE's units changed hands at $1.85. The fund then reported asset backing of $2.53 a unit. The market was valuing the fund at 27 per cent below its own stated worth. The audited cut takes the backing to $2.22. That closes 31 cents of a 68-cent gap, less than half.
MOT tells the same story. Units traded at $1.65 on 30 June against reported backing of $2.15, a 23 per cent discount. The cut to $1.93 closes 22 cents of a 50-cent gap.
MXT, the fund with the least equity, had the smallest gap: $1.91 against $2.00 at the end of June. The audit took away four of those nine cents.
A listed closed-end fund trading below its asset value is not proof the assets are overstated. Discounts reflect fees, liquidity, sentiment and the fact that unitholders cannot redeem at asset value. But the pattern here is hard to dismiss. The bigger the share of hard-to-value equity in a fund, the wider its discount was before the audit, and the bigger the audit's cut. The price on the exchange was not a perfect mark. It was a mark made by people with money at stake, and it was pointing the same way the auditor eventually went.
This publication argued last month that a secondary sale is the only place a private credit valuation meets a buyer. The Metrics listed funds were, in effect, a continuous secondary market in the manager's own portfolio. For months it had been quoting a lower price than the manager.
Why the unlisted funds closed
The listed trusts cannot be redeemed, which is the point of listing them. The unlisted wholesale funds beneath them can, and those are the funds that suspended applications and redemptions on Wednesday.
The reasoning is not spelled out in the filing, but the mechanics are familiar. A fund that lets investors in and out at a published net asset value cannot keep doing so while its auditor will not confirm that value. Anyone who redeemed at the old figure would be paid out at a price the remaining investors may later have to absorb. Freezing is the conventional answer. It protects the people who stay at the cost of trapping the people who want to go.
The Australian Securities and Investments Commission said, without naming any firm, that where redemptions are restricted or deferred, firms should act in investors' best interests and treat those leaving and those remaining fairly, according to Reuters. The regulator warned the industry the previous week about valuations and governance and said firms that fell short should prepare for enforcement action. S&P Global placed four of Metrics' wholesale funds that it rates on CreditWatch.
The backdrop is the August administration of the Sydney developer Bathla Group, which, Reuters reported, owed about A$3 billion to roughly 40 lenders, most of them private credit firms. Some of those lenders have also restricted withdrawals.
For unitholders in MXT and MOT, the immediate effect is small but telling. The September distribution still goes ahead: MXT's record date is today and payment is due on 8 October. It will be paid in cash. Reinvesting it in new units has been switched off, because no one can price new units.
The same argument, on two continents
Four days before KPMG's message to Metrics, staff at the US Securities and Exchange Commission published a statement on how funds should value private assets. It is not a rule and has no legal force. It is worth reading next to the Metrics filings anyway.
The SEC staff noted that private credit held in US registered funds has grown from $170 billion at the end of 2020 to $270 billion at the end of 2025. They wrote that "a lack of timely information does not relieve management of its responsibility to estimate fair value", that managers should calibrate their models against market evidence including secondary-market prices, and that auditors "should not accept less than persuasive evidence".
That is, more or less, a description of what appears to have happened in Sydney. An auditor looked at a manager's estimates, at the market conditions, and at the prices other people were paying, and asked for more downside to be built in. When the downside was built in, it asked for more time.
The audited accounts will settle the numbers for 30 June. They will not settle the question the listed prices have been asking since then, which is whether those numbers are already out of date. MRE's units last traded at $1.68. The audited backing the trustee expects to publish is $2.22.
Net tangible asset figures, the composition of each writedown, watchlist percentages, unit prices and the quoted language on valuation are from the announcements lodged with ASX by The Trust Company (RE Services) Limited as responsible entity of Metrics Master Income Trust (MXT), Metrics Income Opportunities Trust (MOT) and Metrics Real Estate Multi-Strategy Fund (MRE): "Disclosure of circumstances affecting Appendix 4E Preliminary Final Report" (28 September 2026), "Delay in release of 2026 audited financial report" (30 September 2026) and "Suspension of distribution reinvestment plan" (30 September 2026), together with MRE's request for voluntary suspension (28 September) and ASX Supervision's notices of continued suspension under Listing Rule 17.5 (1 October 2026). All were read in full from the ASX announcements platform. The MXT distribution timetable is from its Appendix 3A.1 update of 30 September. The gap calculations are this publication's, from the prices and asset values in those filings. Metrics' approximate A$40 billion under management, the ASIC spokesperson's statement, S&P Global's CreditWatch placement of four wholesale Metrics funds, the KPMG disagreement over fair value of unlisted property equity and the Bathla Group figures are as reported by Reuters (Christine Chen and Scott Murdoch, 30 September 2026). The date of Bathla's administration is from Alternative Credit Investor. The SEC statement is "Statement on Fair Value Measurement and Disclosure Considerations for Private Assets" by Kurt Hohl, Chief Accountant, and Brian Daly, Director of the Division of Investment Management, read on sec.gov; it is a staff statement and has no legal force. Metrics and KPMG had not published any further statement at the time of writing. Accurate to 9.30am ET on 1 October 2026.
Topics marketsprivate creditaustraliavaluation
