{"id":529772,"date":"2026-07-16T23:14:09","date_gmt":"2026-07-16T23:14:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/529772\/"},"modified":"2026-07-16T23:14:09","modified_gmt":"2026-07-16T23:14:09","slug":"private-credit-markets-should-we-be-worried-stock-takes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/529772\/","title":{"rendered":"Private credit markets: Should we be worried? \u2013 Stock Takes"},"content":{"rendered":"
\u201cNotwithstanding the benefits private credit brings, in the form of tailored finance for companies and diversification for investors, it also embeds several vulnerabilities,\u201d it said in May.<\/p>\n
This week, the Australian Financial Review reported that the Reserve Bank of Australia was bracing for mounting defaults across the private credit sector and was concerned that any financial shock from the industry would be exacerbated by highly concentrated loan books in the property sector among fund managers.<\/p>\n
Matt Goodson, managing director at Salt Funds Management, said a source of concern was the number of stocks linked to the artificial intelligence firms.<\/p>\n
\u201cIt\u2019s interesting globally, but it\u2019s not really of great importance here at this stage,\u201d Goodson said.<\/p>\n
\u201cA number of these funds that own that debt have seen sizeable redemptions from investors, so quite a number of these global credit funds have had to limit redemptions,\u201d he said.<\/p>\n
\u201cDownunder, that sort of morphs a little bit more into the murky area of private business lending that\u2019s often in Australia and New Zealand mezzanine property debt.<\/p>\n
\u201cIn New Zealand, we don\u2019t have any large funds that I am aware of that are carrying this debt at prices that are overly optimistic.\u201d<\/p>\n
The Reserve Bank of New Zealand, in its May financial stability report, noted that concerns have increased around private credit markets, particularly in the US.<\/p>\n
Declining investor sentiment has contributed to an increase in withdrawals from private credit firms, the bank noted.<\/p>\n
\u201cRapid growth in private credit over the past decade means any strains in the sector could reduce credit availability for firms and amplify economic downturns.<\/p>\n
\u201cLimited transparency and oversight makes it hard for regulators to determine the level of risk and to respond accordingly.<\/p>\n
\u201cWhile private credit appears to play a relatively modest role in New Zealand, there is a risk of contagion, given the opacity of the sector and the potential for indirect effects via tighter financial conditions abroad.\u201d<\/p>\n
Responses to the bank\u2019s Managed Funds Survey indicated that New Zealand fund managers (including KiwiSaver providers, life insurers and other superannuation funds) hold only a small share of their portfolios in private credit and private equity.<\/p>\n
Sanford upgraded<\/p>\n
Broker Forsyth Barr has upgraded its recommendation for seafood company Sanford to \u201coutperform\u201d from \u201cneutral\u201d following a 17% sell-off since its result in May.<\/p>\n
\u201cSanford is a significantly improved business compared to when CEO David Mair joined two years ago,\u201d Forsyth Barr said.<\/p>\n
\u201cOver this period, it has delivered record earnings and operating cashflow, halved its debt and more than doubled its return on equity, bringing it broadly in line with its cost of equity (9.5%).\u201d<\/p>\n
However, with the stock trading at about nine times its 12-month forward price earnings ratio \u2013 a 45% discount to the market median \u2013 the market clearly did not believe these levels were sustainable, Forsyth Barr analysts said.<\/p>\n
\u201cWe acknowledge that some of the improvement over the last two years reflects tailwinds from factors outside Sanford\u2019s control (strong mussel yields, falling interest rates and stronger catch rates and pricing across wildcatch).<\/p>\n
\u201cHowever, the management-led changes have also delivered a step change in the earnings capacity of this business.\u201d<\/p>\n
Sanford\u2019s strengthened balance sheet and strong free cashflow outlook also provided scope to increase distributions or invest in growth.<\/p>\n
\u201cWe see an attractive risk-reward at current levels as the investment case shifts from business turnaround to disciplined growth and capital returns,\u201d the broker said.<\/p>\n
Xero sum game<\/p>\n
Xero chief executive Sukhinder Singh Cassidy has sold all her shares in the company, which has seen some pushback across the Tasman.<\/p>\n
A notice to the ASX said Cassidy had sold 29,608 shares at A$74 a share, netting A$2.19 million ($2.6m).<\/p>\n
Cassidy said the sale was for tax purposes.<\/p>\n
The Australian Financial Review said the sale unnerved investors at a time when the accounting software group\u2019s chairman, David Thodey, was trying to win shareholder support to award her a more generous pay deal that is less dependent on Xero\u2019s flagging share price.<\/p>\n
The stock last traded on the ASX at around A$69.93.<\/p>\n
Ryman to outperform<\/p>\n
Ryman Healthcare (RYM) has delivered a mixed first-quarter trading update.<\/p>\n
Reported resale settlements remained well below unit turnover, meaning resale inventory continues to build.<\/p>\n
However, a 7% year-over-year increase in resale contracts during the quarter points to a meaningful acceleration in contracting activity over late May and June, Forsyth Barr said.<\/p>\n
The improving contracting momentum is consistent with peer Summerset\u2019s update last week and coincides with a firmer economic backdrop in recent weeks.<\/p>\n
\u201cWe have modestly reduced our resale volume forecasts but continue to see a path for resale volumes to match turnover by the end of 2027, provided recent contracting trends are sustained.<\/p>\n
\u201cThis should position RYM to generate positive cashflow from existing operations for the first time in at least four years.\u201d<\/p>\n
Forsyth Barr rated Ryman as \u201coutperform\u201d.<\/p>\n