Meet the Manager: Metrics Credit Partners

BDO Private Wealth are pleased to have Justin Hynes of Metrics Credit Partners join us for the third instalment of Meet the Manager.

Justin is a Managing Partner at Metrics. He has more than 20 years’ experience working across loan origination, structuring and portfolio management. Justin has extensive acquisition and corporate finance experience in both an advisory and principal capacity in Australia and Southeast Asia, including workouts and restructurings.

Metrics’ investment strategy is a little over two years old, and is a retail, unlisted version of their ASX listed Metrics Master Income Trust MXT, which has a five-year track record. The capital itself feeds down into three wholesale funds, one of which was their original flagship fund, which launched in 2013.

Investment philosophy and approach

According to Justin, Australia’s corporate loan market is a very attractive market, but is bank-dominated and otherwise inaccessible to retail and wholesale investors. Metrics aims to provide access to this market and the returns that it offers by aggregating their investors’ capital to mimic a bank balance sheet.

As professional managers with a long track record and expertise in this market, Metrics look at each lending opportunity loan by loan and borrower by borrower. Whilst they construct portfolios with industry diversification and borrower diversification in mind, they do invest across the credit risk spectrum.

“Our portfolios and our funds generally sit in defensive alternative allocations for our investors. So, it’s floating rate fixed income - it’s very much generating that attractive yield over a floating rate benchmark. It’s not about taking equity risk here,” Justin said.

Diversification into Commercial Real-Estate lending

Justin stated that Metrics’ portfolios are largely reflective of activity in the Australian economy, in regard to their diversity. Metrics looks to diversify across industries, naturally tending toward commercial real estate.  “We like the fact that commercial real estate has tangible asset backing,” Justin commented.

What could the interest rate environment do to house prices?

“Obviously, higher interest costs means that borrowers have less appetite,” Justin said. In lending to fund construction of an apartment block or development, for example, Justin finds that increasing interest rates are yet to affect contracts.

Justin says Metrics is finding that as developments finish construction and contracts settle, pre-purchases from 12-18 months prior are not falling over. Although the pre-purchase marking is slowing down due to rate rises, there are no increases in defaults and signs of credit stress through their lending. Australian consumers continue to complete on pre-purchases, which were often signed prior to recent pricing increases.

To learn more about Metrics, watch the full interview.  

Should you wish to discuss how your portfolio is positioned in the context of your investment objectives and market risks, please speak to your local BDO Private Wealth adviser.

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Metrics Credit Partners is licenced to provide general advice. The information contained is not advice, is general in nature and does not take into account your objectives, financial situation or needs. Before making a decision to invest in this fund please consider the relevant Product Disclosure Statement and Target Market Determination to determine if the product is right for you.

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