First State Super Portfolio Manager Ross Pritchard said while NBLs make up less than 10 per cent of the Australian loan market at the moment, he expects it to grow to become more in line with the US model, where credit markets are more institutional and driven by entities such as insurers and pension funds.
“[NBLs are] two thirds of the market there, it’s a significant number,” he said. “The bond market is twice the size of the equity market.
“I’m not sure where [Australia] will be in two years but I do think it will be somewhere between where it is currently at less than 10 per cent and that US number. I think it’s just a slow but steady migration of the Australian market to something a little more like that model.”
John Corrin, Head of Loan Syndication at ANZ, expects the influx to be more-pronounced in certain sub-sectors of the market.
“I would say that within a few years 50 per cent of the leveraged loan market will be to non-banks,” he said. “And maybe 50 per cent of the project finance market will be to non-banks.”
The insights were delivered on a panel featuring McNamara, Chappell, Pritchard, Corrin and Linda Cunningham, Head of Debt at Cbus Super Fund.