Credit in a maturing super system

Q&A with Katie Dean

We caught up with Katie Dean, Head of Fixed Income, Currency & Credit (FICC) at AustralianSuper, to discuss this ongoing trend.

The FICC team focuses on generating positive returns for members from investments in government bonds, credit and currencies across both developed and emerging market economies.

How is Australia’s retirement system changing?

Australia’s superannuation system is entering a new phase of maturity. Historically, superannuation has been primarily an accumulation story. Today, around 1.6 million Australians over 65 are drawing an income from their super, and Treasury estimates this number will grow to around 2.5 million over the next decade¹.

Australia has built a world-class retirement savings system. The next step is creating a world-class retirement spending system that helps members turn their super into lasting retirement income.

Why does this matter for super funds?

This is not simply a demographic observation; it changes the shape of the investment task. As more members move into decumulation, super funds need to think not only about maximising long-term growth, but also about how portfolios manage risk to deliver more predictable income streams and support members throughout retirement.

A decade ago, retirees were more likely to rely on the Age Pension than super as their main retirement income source (38 percent versus 28 percent). By 2022-23, the numbers had reversed, with 34 percent of recent retirees relying primarily on super, compared with 28 percent on the Pension. At that point, close to two-thirds of pre-retirees were expecting super to be their main source of income in retirement².

As super assumes a greater role in supporting Australians through retirement, funds increasingly need portfolios that can deliver both long-term growth and more reliable income outcomes.

What does this mean for the way AustralianSuper invests?

Alongside growth assets, such as listed equities, investments that can provide regular income, diversification and downside resilience become increasingly important. Credit is one example. Fixed income can provide access to more predictable and diversified income streams and a broad range of opportunities across public and private markets.

AustralianSuper recently brought private credit into the broader fixed income portfolio. Why was that an important change?

This adjustment reflects our view that credit can better deliver for members if we approach it holistically across the investment universe. Credit is a broad and diverse asset class, spanning public and private markets. The change will allow us to assess opportunities across the credit spectrum more effectively, with a more integrated approach to portfolio construction, including how different forms of credit work together.

As Australia's credit market deepens, we believe a more integrated approach to credit investing is the best way to access those opportunities.

As private credit has grown, some observers have raised concerns about the risks associated with the asset class. How does AustralianSuper think about this exposure?

Private credit encompasses a wide range of lending strategies, spanning senior secured corporate lending through to more complex and higher-risk strategies. As a result, risk and return outcomes can vary significantly across different parts of the market.

As private credit has grown, some observers have raised concerns about potential risks, such as elevated leverage, weaker lending standards in some segments of the market and the ability of certain borrowers to navigate a higher interest rate environment. These are important considerations for AustralianSuper; however, it should be noted, these risks are not uniform across private credit and require careful assessment at both the manager and portfolio level.

From our perspective, successful investing in private credit starts with disciplined underwriting, strong loan structures, appropriate diversification and careful manager selection. We focus on how capital is protected in downside scenarios and believe successful private credit investing is driven as much by avoiding losses as it is by generating income.

Private credit can play a valuable role within a diversified portfolio through its potential to generate resilient income, provide access to opportunities that are less readily available in public markets and offer return drivers that differ from many public market exposures. As always, opportunities are assessed through the lens of long-term risk-adjusted returns and member outcomes.

How else is AustralianSuper’s credit toolkit evolving?

We’re building a global credit capability, with talented teams in Australia, the UK and the US, as well as through world class partners.

It’s no longer a simple question of how much credit to own but deciding which forms of credit are best suited to different portfolio objectives and market environments.

Different credit instruments offer different combinations of income, liquidity, duration and risk, and they can behave differently across market environments. As part of evolving our approach, we will invest across a broader range of credit sectors, including leveraged loans, high-yield bonds, private credit and investment-grade credit, each of which offers different combinations of income, liquidity, duration and risk.

How does AustralianSuper access these opportunities?

Australian Super currently manages over 56% of members’ money internally³. Where appropriate, and to deploy at scale, we also partner with specialist external managers to access segments of the credit market that require distinct sourcing, structuring or asset-class expertise.

How has Australia's credit market developed in recent years?

Australia's credit market is showing clear signs of structural maturation, becoming deeper, more diverse and increasingly connected to global capital markets.

The growth is evident in market activity. Total Australian bond issuance reached an all-time high of approximately A$325 billion in 2024 and remained near-record levels at around A$320 billion in 2025⁴. 

Historically, corporate funding in Australia has been heavily bank-intermediated, with public bond markets playing a smaller role than in the US or Europe. That is changing. Australian corporates are increasingly raising longer-dated debt in domestic markets, broadening their funding options and reducing reliance on offshore borrowing. The growing availability of longer-tenor funding is also enhancing the attractiveness of Australian dollar markets for offshore issuers seeking to better match the maturity of their liabilities to long-term funding needs.

How is the growing flow of investments from regional economies adding flexibility to debt markets in Australia?

The Australian dollar is evolving beyond a domestic savings currency into a regional funding channel.

Supranational and corporate issuers are making greater use of Australian dollar markets, supported by stronger offshore demand, a broader investor base and improving liquidity across the curve. For investors, this is contributing to a deeper and more diverse credit market, with a broader range of opportunities available across sectors, issuers and maturities.

The broader market has also reached significant scale. Reserve Bank of Australia (RBA) data released in June 2026 estimates the total Australian debt market at approximately $2-2.5 trillion, including around $900 billion of corporate, bank and securitised bonds.

While Australia's corporate bond market is still developing by international standards, particularly for lower-rated issuers, Australia now benefits from a deeper sovereign yield curve, a large superannuation savings pool, growing Asian investor participation, stronger market infrastructure and increasing use of the Australian dollar as a funding currency.

Why does the development of Australia's credit market matter to investors like AustralianSuper?

A deeper credit market benefits both the Australian economy and long-term investors. It strengthens funding resilience, by creating alternatives to traditional bank lending, reducing reliance on offshore funding markets and providing more pathways for capital to reach Australian businesses and infrastructure projects.

For investors, a broader and more liquid credit market expands the opportunity set and provides greater access to income-producing investments.

While a deeper credit market is not a complete solution to Australia's retirement or productivity challenges, it definitely helps us respond.

Why does a deeper credit market matter for Australian businesses?

It means businesses have access to a broader range of financing options. Different funding structures are suited to different projects, risk profiles and stages of growth.

For example, an infrastructure project with a long asset life may benefit from longer-dated funding that better matches the life of the asset, while a growing company may require more flexible financing to support expansion. Businesses may also choose between fixed and floating-rate borrowing depending on their funding needs and broader market conditions.

A mature capital market gives borrowers greater flexibility to choose the form of capital that best supports productive investment. Over time, that can support a more resilient financial system and create more efficient pathways for capital to reach Australian businesses and infrastructure projects.

For media enquiries, please contact:

Angus Livingston
E: alivingston@australiansuper.com
M: +61 438 012 162