Metrics Credit Partners suspends redemptions after KPMG valuation dispute

Metrics Credit Partners has suspended applications and redemptions in the unlisted wholesale funds that sit behind its ASX-listed trusts after disclosing that its auditor, KPMG, disagreed with how some of those assets were valued and would not sign off the trusts' financial reports by their 30 September deadline. The firm manages around A$40bn, and because the disagreement is recorded in ASX filings, a valuation argument inside a private credit manager has become a public event.

The gate followed a trading halt. Trading in the three listed vehicles was suspended on Monday after separate filings showed KPMG reaching “different decisions” from the firm on inputs and probability weightings used in Metrics' preliminary financial reports. The three are Metrics Master Income Trust and Metrics Income Opportunities Trust, both private credit funds, and the real estate debt and equity vehicle Metrics Real Estate Multi-Strategy Fund. KPMG's findings cut net tangible asset values by 12.16 per cent at the real estate fund, 10.08 per cent at Income Opportunities and 1.99 per cent at Master Income Trust.

The spread between the three cuts points to a dispute concentrated in particular assets rather than spread across a book. The real estate markdown of 12.16 per cent is more than six times the income fund's 1.99 per cent, and Income Opportunities took a 10.08 per cent hit five times larger than Master Income Trust's. The filings do not identify which assets, but the argument was over inputs and probability weightings, the assumptions behind the numbers rather than the arithmetic of them.

Together the halt and the gate close both exits: a holder of the listed trusts cannot trade out on the ASX while the suspension stands, and an investor in the wholesale vehicles behind the trusts can neither subscribe nor redeem. The gate runs in both directions, and that symmetry holds the funds' size in place while the valuation question is open, which suggests the pressure sits on the asset side rather than the liability side.

Two other Australian managers closed their doors earlier for a different reason: Centuria Bass paused redemptions and applications in the Centuria Bass Credit Fund and the Bass Property Credit Fund on 14 August after redemption requests driven by concerns about Bathla Group, whose collapse later in August left some 40 lenders owed around A$3bn. CVS Lane Capital Partners suspended applications and redemptions across its First Mortgage Fund and Property Finance Fund in late August, with reported exposure to Bathla running through nine separate loans.

Those freezes were answers to investor demand, while Metrics' is an answer to an audit: the trigger named in the filings is KPMG's disagreement, and the account does not connect Metrics' markdowns to Bathla. Across all three managers the suspension ran in both directions, so none is merely slowing an exit; each has stopped its vehicles from changing size while the marks are argued over. Whether that pattern reflects a regulatory expectation or an industry norm is unclear.

Three managers have now stopped flows inside about six weeks, and the sequence alone does not establish whether that is a market-wide repricing or a property-lending problem that has reached three managers at once. The manager's roughly A$40bn book sits inside a domestic private credit market of A$200bn that has become newly stressful, and an audit disagreement at a firm of that size does not stay an audit matter. The same report points readers to separate coverage of an Australian regulator cracking down on three private credit products.

As this publication has argued, the next default cycle is likely to be a disclosure cycle, and managers who treat marks as opinions will lose that argument. The Australian episode shows disclosure arriving ahead of defaults in a public venue: the dispute went to an auditor, the correction went into ASX filings, and the deadline was a public date. No recovery rate or amended loan is at issue; the marks moved because an accounting firm weighted the inputs differently. The caveat is the asset mix: property and real estate debt in Australia, not the seasoned corporate unitranche the argument was built on, so what is being tested is the mechanism more than the loss assumptions underneath it.

The report also draws a line to the US, where business development companies have faced heavy redemptions over the past year amid concerns about credit quality and the sector's heavy exposure to software borrowers. The collateral does not overlap, but the structure point does: a listed wrapper gives these vehicles a public price and an exit, and the halt withdraws both at once. For an allocator, the Australian version offers something the American one does not: a dated filing, a named auditor and a specific markdown give a limited partner something to price, while redemption pressure spread across a sector does not.

KPMG said it could not sign off the trusts' financial reports by 30 September, and until it does, the listed vehicles have no audited numbers and the wholesale funds behind them have no way in or out. Metrics has described the suspension as temporary. The next test is whether the sign-off arrives and whether the marks hold when an auditor reads them a second time.