With the result of the Australian federal election over the weekend now confirmed, we’re seeing political clarity return at a time when interest rates are beginning to ease. Together, these factors are creating a more constructive environment for businesses and the broader market. This could also point to a positive outlook for private credit.
As interest rates fall, borrowing costs are easing for businesses across the economy. While this makes it cheaper for some companies to access bank lending, many mid-market and non-traditional borrowers remain underserved by the banks. For these businesses, private credit continues to play an essential role providing funding solutions where bank lending may be unavailable or insufficient.
Political certainty following the election result adds further confidence for businesses, helping them move forward with plans that may have been delayed due to uncertainty. This clearer backdrop, combined with lower borrowing costs, is at least in the near-term net positive for business sentiment and activity.
This environment may lead to increased demand for capital from businesses looking to fund growth, acquisitions or operational needs outside of traditional bank channels. While competition among lenders may increase as more capital seeks a home in private markets, disciplined lending and careful deal selection remain critical.
Overall, private credit appears well-positioned to continue supporting businesses that fall outside the reach of bank lending, while offering eligible investors access to opportunities that contribute directly to the real economy.
