Interest in facilitating Australian corporates’ access to alternative sources of debt is rising. Direct lending, where businesses obtain funding directly from institutional investors, for example, superannuation funds (rather than from a bank) is on the rise. Here the borrower, a non-financial corporation (NFC), sells a debt instrument directly to a fund, either locally, in AUD, or overseas, normally in USD.
This discussion paper examines the emergence of direct lending as an alternative to traditional business banking and explore the role of Australian superannuation funds in developing this market. Specifically, it considers whether these deals represent value for superannuation funds’ members, as well as Australian corporations.