NEW ZEALAND Law and Practice Contributed by: David Weavers, Alex MacDuff, Matt Consedine and Verniel Virtucio, Russell McVeagh
Russell McVeagh Vero Centre 48 Shortland Street PO Box 8 Auckland 1140 New Zealand
Tel: +64 9 367 8000 Fax: +64 9 367 8163 Email: David.Weavers@russellmcveagh.com Web: www.russellmcveagh.com
1. Private Credit Overview 1.1 Private Credit Market
(a) macro-economic conditions increasing distress levels; this caused some borrowers to refi - nance bank debt with private credit and others to borrow subordinated debt in order to reduce senior debt levels, which presented opportuni - ties for private credit providers; and (b) tightening spreads and excess dry-powder gave rise to a number of amend and extend, dividend recaps and other refinancing opportu - nities for private credit funds. Sectors that saw significant private credit activity dur - ing 2025 include: • asset finance providers, particularly as holdco debt behind senior securitisation structures; • oil and gas, particularly due to banks stepping back from this space; • tourism, hospitality and retail/consumer discretion - ary; and • real estate development; banks remain willing to fund real estate development, but strict pre-sale requirements in a flat housing market have led to a continued focus on private credit funding for developments. 1.2 Interaction With Public Markets There is no established high yield bond market in New Zealand. While there is an active debt capital market for corporate issuers, this is typically reserved for investment grade companies. Accordingly, private credit tends to not compete with New Zealand’s debt capital markets.
New Zealand has been slow to adopt private credit for corporate borrowers compared with more established markets overseas. It has a well-established non-bank real estate property lending market. That said, the private credit market has been growing at a steady pace in recent times on two fronts: • there is strong appetite from offshore private credit funds to lend to New Zealand borrowers. These market participants range from smaller, specialised funds to credit strategies sitting with global finan - cial sponsor platforms; and • a number of New Zealand based fund manag - ers have raised funds. Whilst fund raising has been challenging, a recent influx of investment (including via the Active Investor Plus Visa – see 1.4 Challenges ) has led to a surplus of dry pow - der amongst domestic funds and a need to find deployment opportunities. Private credit funds tend to focus on the leveraged and sub-investment grade markets. Recent themes in these markets include: • on the one hand, subdued M&A activity causing limited acquisition financing opportunities for pri - vate credit funds; and • on the other hand:
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