Late-Cycle Signals: Global Allocators Shifting to Non-USD Real Asset Lending

In recent discussions with more than 100 global allocators across iConnections in Miami and the Agriculture Investment Marketplace in San Diego, a consistent tone was evident. Interest has shifted toward diversifying into asset-backed direct lending opportunities outside the US dollar, particularly in first-world jurisdictions such as Australia and New Zealand. 

The week’s US–Iran escalation and the resulting market volatility was a reminder that geopolitical risks are often visible in advance, but their consequences rarely unfold in predictable ways. In such an environment, the appeal of unlevered senior lending against real assets, where returns in the 8–11% range are derived from contractual cashflows rather than multiple expansion, becomes clearer. Not because these assets are immune to risk, but because the sources of return are more explicit and, in our view, more controllable. 

Key insights 

• The AI discussion is shifting from opportunity narrative to portfolio risk variable. How deeply it will impact recurring revenue models, labour structures, capital intensity and ultimately where economic rents accrue are all up for debate. The core concern for allocators is the impact on what were previously viewed as durable cashflows across other industries (SaaS, professional services, etc). While most allocators were proponents for AI’s long-term benefits, the immediate focus has moved to second-order effects on portfolio resilience. 
• Liquidity assumptions are being recalibrated. Allocators increasingly recognise that liquidity premia exist for a reason. Capital that can be redeemed quickly tends to earn lower returns, while strategies that commit capital for longer periods are compensated accordingly. Private credit may offer shorter duration than private equity, but it is still fundamentally a medium-term lending activity rather than a liquidity sleeve. The growing appreciation is that return expectations and liquidity terms must remain aligned with the underlying assets. 

• Correlations remain elevated. Global markets are tightly linked through trade, capital flows and policy responses. Many allocators acknowledged that while portfolios appear diversified across asset classes, underlying return drivers are often the same. The renewed focus is on exposures anchored in genuinely different cashflow sources. 

• Geopolitical risk is now embedded in underwriting. Defence spending, sanctions regimes and supply-chain realignment are influencing capital allocation decisions at the asset level. Resources and food security are increasingly treated as structural considerations rather than cyclical themes. 

• Portfolio construction is adjusting to higher volatility. Persistent swings in public markets, and potential spillover to credit markets, are reinforcing allocator interest in exposures driven by asset-level cashflows rather than market pricing. The emphasis is on collateral-backed income streams with lower day-to-day sensitivity to macro sentiment. 

Against this backdrop, Australia and New Zealand continue to present a stable operating environment for senior secured lending across real-asset sectors. Transparent legal frameworks established creditor protections and productive asset bases across commercial real estate, agriculture, infrastructure and resources support income streams linked to underlying economic activity. 

In these late-cycle conditions, we expect to see the continued shift from allocators seeking incremental yield to capital preservation and certainty of real asset backing.  Our experience of direct lending over the last twenty years suggests a sustained period of volatility will create new lending opportunities as leveraged financiers retreat from the market.