The Australian regulator, has issued a fresh warning to private credit firms, urging them to ensure their 30 June asset valuations are “current, accurate and grounded in realistic assumptions”.

The Australian Securities and Investments Commission (ASIC) put private credit firms on notice as part of its ongoing probe of the sector, and it follows an eight-week voluntary survey, alongside targeted surveillance and engagement with market participants.

The survey, conducted between 26 March and 14 May, collected responses from 22 managers covering 52 funds with around $76bn (£57.2bn) in assets under management. It said its broader work also indicates valuations are lagging economic reality, with weaker borrower conditions increasing the risk that reported valuations do not fully reflect underlying economic conditions.

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ASIC said that from the work conducted so far, it has found:

• Credit deterioration is emerging unevenly with pockets of higher defaults, impairments, and loan amendments
• Redemption requests remain contained in aggregate, with higher activity observed in some feeder funds investing in global private credit managers
• Leverage and line of credit usage remain minimal
• Most funds continue to manage liquidity adequately, although buffers are tightening
• Macroeconomic pressures, including inflation, rising costs and supply disruptions, are affecting borrower performance
• Softer investor inflows are slowing growth and tightening lending conditions
• The growth in number of funds has notably slowed
• Management of concentration risk is variable

Its broader work also found inconsistent definitions for arrears, impairment, loan amendments and provisioning, reducing comparability across funds and affecting how performance is understood. Current market conditions are also increasing conflict risk and some portfolios have a higher exposure to a single developer group, further increasing risk.

For those reasons, ASIC said firms need to refresh 30 June valuations as an “immediate point of action” in private credit and across private markets more generally.

“If valuations do not reflect current conditions and incorporate verified accurate information, there is a higher risk of misinformation and poor investor outcomes,” the regulator said. “ASIC expects participants to challenge assumptions and refresh valuations to ensure they are based on realistic and supportable inputs.”

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ASIC released ten private credit principles in 2025, and since then it said it has “observed some improvement in private credit fund practices”, but it said these remain uneven across the market and it will continue to review the sector. In 2025, it issued stop orders against three funds.