Periods of credit tightening rarely arrive gradually, instead emerging through short bursts of volatility that reshape borrower behaviour and capital availability. As credit spreads widened approximately 17bps (iTraxx AU CDS) through March before fully retracing this month, the practical impact of recent geopolitical uncertainty is a shift in pipeline borrower behaviour, sponsors are increasingly prioritising certainty of funding rather than shopping term sheets. Historically, new loans during these periods have produced some of the strongest vintages, and the signs are there that similar conditions are emerging:
- Senior lending transaction flow has accelerated following the volatility shocks markets experienced in March and early April. Over $500m of pipeline has moved from potential to ‘under term sheet’, as borrowers see credit tightening in markets and seek funding certainty.
- CRE lending opportunities are becoming better structured, with sponsors ready to progress rather than further extending pricing negotiations. Our target deployment continues to be supply-constrained sectors, particularly residential and mixed-use assets.
- Agricultural lending activity outlook remains positive, supported by stable underlying cashflows and resilient export demand despite trade tariffs. Funding farmland acquisitions to achieve greater scale and operating efficiency remains a key driver of private capital demand, particularly where borrowers are seeking to diversify geographic growing regions.
- Infrastructure investments continue to demonstrate strategic value during periods of geopolitical disruption. The two port assets within the portfolio have experienced increasing throughput for 2026 and reinforce supply chain infrastructure as a core component of diversified asset-backed lending.
- Capital recycling is supporting redeployment into new opportunities. The recent full repayment of the Elements construction facility following delivery of a 67-townhouse development in Williamstown, demonstrates the ability to recycle capital efficiently into new lending vintages.
Tighter liquidity is already reshaping how transactions are progressing, with sponsors focusing on delivery-ready projects and lenders applying greater discipline to new commitments. As deal flow strengthens across our core markets and capital remains available to deploy, the opportunity set is shifting toward better structured loans that support disciplined portfolio growth.
