KPMG's valuation calls forced markdowns at three ASX-listed trusts and a redemption freeze across about A$9.3 billion of unlisted funds at one of Australia's largest private lenders.
At Metrics Credit Partners, the new marks came from the auditor.
The Australian private credit manager, which oversees about A$40 billion, had three listed trusts suspended from quotation on the ASX on Sept. 28: Metrics Master Income Trust, Metrics Income Opportunities Trust and Metrics Real Estate Multi-Strategy Fund. The flagship trust's responsible entity, a Perpetual group company, said it expected "material differences" between the unaudited annual results released Aug. 31 and the audited accounts.
Those differences arrived as cuts to net tangible assets per unit. The real estate fund's fell 12.16%, to A$2.22 from A$2.53. Income Opportunities fell 10.08%. The Master Income Trust fell 1.99%, to about A$1.96 from A$2.00.
On Sept. 30, KPMG told the responsible entity and Metrics that it could not deliver its audit opinion by that day's deadline. Publication of net asset values, and applications and redemptions in the underlying funds, were suspended. The Master Income Trust will stay suspended until the audited report is lodged.
Why the numbers moved
Metrics said the auditor made "different decisions" on valuation inputs and probability weightings, and that final valuations put more weight on downside scenarios. Loan-loss provisions were raised at all three trusts, with the company citing interest rates, economic conditions and heightened regulatory expectations. Most of the real estate fund's cut came from its holdings of unlisted commercial property equity.
What the market had priced
The listed real estate fund had already told a harsher story. Its units last traded at A$1.68 before the suspension, about 34% below the old A$2.53 value. Even after the auditor's cut, that price is about 24% under the revised A$2.22. The discount investors had applied was nearly three times the markdown the auditor imposed.
The unlisted freeze
The larger exposure sits outside the exchange. Redemptions are frozen at the A$6 billion MCP Wholesale Investment Trust and the A$3.3 billion wholesale Real Estate Debt Fund, and no reopening date has been set. Together they hold about A$9.3 billion, roughly 23% of the firm's assets under management.
Pinnacle Investment Management owns a 35% equity interest in Metrics Credit Holdings.
The backdrop
The Reserve Bank of Australia lifted its cash rate by a quarter point to 4.60% on Sept. 29, its fourth increase of 2026 and the highest level since 2011, and Metrics' own explanation points to rates. The episode also follows a Sept. 28 U.S. Securities and Exchange Commission staff statement on private credit valuation, and a speech the previous week in which an Australian Securities and Investments Commission commissioner urged write-downs.
It extends this year's run of redemption limits at semi-liquid private credit vehicles, from U.S. non-traded business development companies to Australian funds.
Two readings
One reading is that this is the system doing its job. An auditor challenged a manager's assumptions, the values moved, and redemptions were paused so that investors who leave early don't hand losses to those who stay.
The other reading is that a gap of up to 12% between a manager's marks and an auditor's in a single review raises questions about valuations at private credit funds with no listed units to check them against. The listed fund's remaining discount to its revised value suggests the market expects further cuts.
What to watch
The audited report is the next milestone, and its figures could differ again from the revised net asset values. Neither the lodgment date nor a date for reopening redemptions has been set. The trading price of the listed trusts, once they resume, will show how much of the markdown investors believe is complete.