Aura Group says Australian private credit outperforms public fixed income as rate volatility hits bonds
TLT•Aura Group argues public fixed income undercompensated duration risk
Aura Group Holdings published analysis arguing Australian public fixed income undercompensated duration risk across 2015-2025.
Cash rate moved from 2.5% to 0.1%, then rose to 4.35% within 18 months, driving bond volatility.
Private credit highlighted as higher yielding and less rate-sensitive
AusBond Composite posted its worst calendar year in 2022, falling over 9%, with losses attributed mainly to duration.
Private credit in Australian business lending is described as higher yielding, typically 2.5%-5% over the bank bill swap rate.
Analysis highlights floating-rate warehouse structures as limiting interest-rate beta, with drawdowns tied mainly to credit losses rather than rates.
