Global equity markets came under pressure this week as oil prices surged amid escalating Middle East tensions.

The S&P 500 fell 1.74%, the Nasdaq dropped 2.38% and the Dow shed over 460 points. Brent crude jumped sharply to settle above US$108 a barrel as traders weighed the risk of a prolonged conflict, with diplomatic efforts between the US and Iran showing little sign of progress.

Commentary from Industry Leaders

Since there is a lot of talk around private credit, specifically the US SME private credit market, here is some commentary from Longreach on their update on Australian mid-market private credit.

Key Takeaways:

• The global private credit market has grown to over US$1.7 trillion and cracks are starting to show, particularly in the US, where several large funds have reported losses, dividend cuts and falling asset values.

• A big part of the problem is that 20–30% of US private credit is lent to tech and software companies that are now being disrupted by AI. Many of these borrowers are heavily indebted and under pressure.

• Many US and European funds have also borrowed money themselves to boost returns. When things go wrong, this magnifies losses and can force them to sell assets at the worst possible time.

• Borrower protections in US loan agreements have been steadily watered down over recent years, leaving lenders with fewer rights exactly when they need them most.

• The Middle East conflict is adding further stress globally, pushing up inflation and raising the risk of recession in major economies.

Why Australia Looks Different

Australian banks have shifted their focus heavily towards home loans — over 60% of their lending now goes to housing, leaving more than 25,000 mid-sized businesses increasingly dependent on private lenders to fund their operations.

This creates a genuine opportunity: only 14% of Australian corporate lending comes from non-banks, compared to 91% in the US, meaning less competition and better loan terms for lenders.

Australian private credit lenders also tend to lend more conservatively and with stronger borrower protections than their US counterparts.

The Australian private credit market has been growing at 20% per year and is forecast to reach $323 billion by 2028. But with 158 funds now available and most launched after 2020, choosing an experienced manager who has navigated a full market cycle is more critical than ever.

Economic News

The February inflation numbers came in at 3.7% — technically a small improvement, but by the time they were published they were already out of date.

Here's where we stand: oil is up 40% since the war started, petrol is above $2.40 a litre, and Treasury is already flagging that its earlier modelling — which had inflation hitting 5% — may be too conservative.

The drivers were already uncomfortable before the conflict: housing up 7.2%, food up 3.1%. Now add surging fuel costs flowing through to transport, construction and groceries, and you've got a very difficult picture for the RBA. Last week the labour market was beginning to cool — exactly what the RBA was hoping for. The risk now is that the Bank is forced to keep hiking to fight oil-driven inflation, even as the economy is already slowing. Markets are pricing in another rate rise in May, and RBA Governor Michele Bullock has been unusually blunt: if inflation can't be tamed, recession becomes a real possibility.

Treasurer Chalmers summed it up well: purely from an economic and market point of view, the end of this war can't come soon enough.

Market Snapshot

• Australia: ASX drops with Iran in focus

• United States: Dow -1.01%, S&P 500 -1.74%, Nasdaq -2.38%

• Bonds: US 10-year yield at 4.41%, Australian 10-year yield at 5.01%

• Gold: Declined overnight

Key Events Coming Up

• Tuesday 31 March: US CB Consumer Confidence

• Tuesday 31 March: JOLTS Job Openings

• Wednesday 1 April: US Crude Oil Inventories

• Thursday 2 April: US Initial Jobless Claims

Investment Update

Expression of Interest — Latitude Capital Notes 2, Indicative Yield 8.45%–8.65%

Investors are invited to register a non-binding Expression of Interest in relation to the proposed issue of Latitude Capital Notes 2, a new ASX-listed hybrid security to be issued by Latitude Group Holdings Limited. Latitude is proposing to issue subordinated, unsecured, perpetual notes targeting quarterly floating-rate distributions, which are expected to be franked, subject to the terms of the offer and Latitude's franking position.

This is not an offer or recommendation. Any investment may only be made via the prospectus when available.

Offer Snapshot (Indicative Only)

• $100.00 issue price

• Quarterly, floating-rate discretionary distributions

• Expected margin: 4.15%–4.35% p.a. (over 3-month BBSW)

• Expected to be fully franked (subject to capacity)

• 3.00% margin step-up if not redeemed or converted by April 2031

• Transaction size: $100M

• Final terms to be set following the bookbuild

Structure

• Subordinated, unsecured, perpetual notes

• No fixed maturity date

• Distributions are discretionary and subject to conditions

• Ranking ahead of ordinary equity, but behind senior creditors in a winding-up

Access

• Reinvestment Offer for Latitude Capital Notes 1 holders (ASX: LFSPA)

• Broker Firm Offer (no general public pool)

Potential Portfolio Considerations

Subject to individual circumstances and suitability, Latitude Capital Notes 2 may be relevant for investors seeking:

• Income diversification through floating-rate distributions

• Floating-rate exposure linked to 3-month BBSW

• Hybrid securities exposure, positioned between senior debt and equity

• Listed exposure, with expected ASX quotation (liquidity subject to market conditions)

• Franking potential, which may enhance after-tax returns for eligible investors

These securities are more complex than traditional fixed income and may not be suitable for all investors.

Key Risks and Considerations

• Distributions are discretionary and not guaranteed

• The Notes are perpetual and may never be redeemed

• Exposure to issuer credit risk, market risk and hybrid-specific risks

• Possible conversion into ordinary shares under certain circumstances

Timing

• Broker bids due: 4:00pm, 27 March 2026

• Offer expected to open: 1 April 2026

• Allocations are limited and the offer is likely to close early

Please note that participation in any investment opportunity is subject to completion of due diligence, confirmation of eligibility, availability and final terms.