Dear Investors,
In the second quarter of CY2025, the Defender Credit Fund (“DCF”) team continued to assess new loan opportunities, with several new loans progressing to the investment committee. Given current macro-economic variables (inflation, interest rates, employment) and a dynamic housing environment, the DCF team is endeavouring to take on less risk across the loan book.
This means new loans typically have lower loan to value ratio (LVR), improved security position and are located in, or close to major metropolitan areas.
With interest rates in Australia now firmly in a cutting cycle, this is expected to become a tailwind for certain components of the loan process – particularly in default scenarios given the typically shorter time on market for home sales and in some cases improved equity values over time with the potential for a rising residential property market.
With these conditions emerging, the DCF team is fielding increased enquiry for new loans. We reject significantly more loans than those that progress to the investment committee, reflecting our rigorous selection process.
DCF has a thorough process for loans that trend towards and ultimately enter a default position. With careful monitoring of individual loans and the overall loan book, swift and firm action ensures any default situations are adequately managed, of which several were successfully dealt with over the quarter.
Private credit in Australia continues to grow strongly, with multiple experts expecting it to become a staple for diversified portfolios, especially for older Australians:
The demographic shifts of more retirees and pre-retirees looking for more attractive income returns is happening across the developed world, according to Nehemiah Richardson, CEO of Pengana Credit.
“The retirement bulge happening across the developed world is driving a hunger for more diverse sources of fixed income returns, as more investors target investments with a low correlation to traditional equities and bonds.
“That need to add more stability to portfolios, by diversifying sources of fixed income, could see global private credit move from becoming a niche strategy to something considered a necessity.”
Source – https://dcfloans.com.au/
For more information on DCF and a useful borrowing calculator, please visit DCF Lending Pty Ltd website here.
Distributions for the period were made across our different class types:
- Class D – 15%pa, 14-month term (minimum investment $1.5M).
- Class E – 14%pa, 14-month term.
- Class F – 7%pa, 7-month term.
As always, we are available for a more granular conversation at any time.
Regards,
The Defender Credit Fund Team
More information on the Defender Credit Fund can be found at:
https://www.defenderam.com/
