Liquidity is reshaping risk and return and investors need to be selective

This interview was filmed 12th February, 2026.

There was no shortage of high-level corporate bust-ups last year in Australia and globally. The high-profile collapses of US-based companies First Brands and Tricolour shook the private credit sector globally, while on the home front, there was enough going on for regulator ASIC to shine a light on Australia's own private credit practices. And just like a kiss-cam at a Coldplay concert, it did not like what it saw.

At the end of last year, ASIC issued its response and recommendations following that review. I sat down with Alex Hone, Managing Partner of Keyview Financial Group, to discuss what the findings mean for the sector, what changes are ahead in 2026, and how Keyview is positioning itself to make the most of the opportunities.

A new kid on the block

Private credit has been part of Australian financial markets for some time, but as a recognised modern asset class, it's only been growing meaningfully over the past decade.

That relative newness on the broader landscape, and the fact its growth did not stem from the traditional domestic fund managers resulted in .

According to Hone, the industry is split between a number of larger independent, non-bank groups, a handful of mid-size players like Keyview, and a very long tail of smaller outfits. 

"Barriers to entry are low," he says, and that's had real consequences for how some participants operate.

“A lot of groups have been born out of commercial banking backgrounds or investment banking backgrounds,” says Hone, “and thought to apply similar commercial approaches into a regulated funds management environment, which ASIC’s review really highlighted aren’t appropriate.”

ASIC's concerns

The issues ASIC identified weren't obscure or technical. They centred on governance, fee disclosures, portfolio transparency, and alignment between managers and investors, what Hone calls "foundational funds management 101."

"Avoiding misalignment with investors should be the staple of every funds management house out there. People shouldn't need to be told that not disclosing their fees, not providing full transparency to clients about what risks are in the portfolio - they're all very foundational and obvious things for an industry to get their head around."

One practice that drew particular scrutiny was managers earning fees at the underlying loan level without disclosing them at the fund level. Some were also reportedly taking loans onto their own balance sheets and selling them into investor vehicles at a lower different interest rate, thereby capturing the margin.

Will new regulations follow?

Whether ASIC introduces new rules in 2026 remains an open question. Hone believes the regulator may not need to if the industry responds appropriately.

“It’s going to come down to how the industry responds,” he says.

He expects change to occur at the product level, particularly where fee structures were embedded in underlying loans but not clearly disclosed to investors.

“If the industry’s slow to adopt, or similarly the pressure applied by investors is not as strong as it should be, then I’m certain that ASIC will be more forthright.”

Liquidity - the real market force in 2026

Beyond regulation, Hone's biggest watchword for 2026 is liquidity.

“We are sitting in a market environment at the moment where there is a lot of liquidity,” he says. “When you have a lot of supply, it ultimately leads to higher pricing, which in this instance means lower returns for investors.”

There's a lot of capital competing for deals right now, which compresses returns. For managers running large books and material new inflows, that amplifies pressure.

"If you're a $10 billion manager and you have a two-year average loan duration, it means that in the year coming up you need to underwrite new loans of $5 billion - that's before you allocate new FUM growth."

Where Keyview sees opportunity

Keyview positions itself away from the most crowded parts of the market, specialising instead on what Hone calls opportunistic or special situation deals. In practice, that means lending where speed, complexity or structuring flexibility matters more than competing on price.

“We specialise in providing borrowers capital where they need a tailored solution that a standard bank or non-bank lender is not able to provide,” he says.

Examples include cases where borrowers don’t neatly fit standard credit templates, short-term funding for acquisitions, or situations where traditional lenders have withdrawn.

“If you’re a borrower and you don’t fit into a plain vanilla box, it’s very hard to engage with those parties,” Hone says. “Keyview sits in between standard lenders and raising equity.”

For Keyview, that means generally achieving a higher rate of return on the loans they are making without necessarily taking on incremental risk.

“That liquidity issue that I spoke about earlier, we think that will be a continuing thematic of this year, but ultimately that doesn't impact us in the same way it would other non-bank lenders or banks for the same reason because we're not competing for the same loans.”

What investors should be watching

Hone says the key risk is not the asset class itself but how capital is being deployed in a crowded market.

“If investors are exposed to private credit and they’re exposed to managers that have had large increases in funds, they really need to ensure that the capital’s been allocated efficiently and that the manager is not just wanting to grow for their own profitability,” he says.

The industry has also grown during a benign economic backdrop. “It’s been a long time since Australia’s had a recession, so you’ve got a new industry that’s gone a long, extended period without a major downturn.”

"Investors just need to be very comfortable that the issues ASIC have identified have been adequately addressed — that they've got appropriate governance and independence, appropriate resources, and the appropriate workout skills that sit within the business."

Looking further out, Hone is broadly optimistic. He expects the industry to mature, governance standards to lift, and the asset class to grow.

But he also expects there will be more casualties along the way.

"Unfortunately, there'll probably be instances of capital loss. But as a whole, I'm very confident the industry will be in a much better place in three to five years' time than it is today."

Learn more

Keyview aims to deliver high risk-adjusted returns by staying focused on capital preservation and identifying mispriced opportunities that provide consistent in investment outcomes. To learn more, visit their website.