MA Credit Portfolio Notes Achieve 1.97% Quarterly Return as MA Master Credit Trust Sustains Robust Credit Metrics

Portfolio Structure and Diversification Strategy Across Multiple Asset Classes

MA Credit Portfolio Holdings Limited issues MA Credit Portfolio Notes, granting investors exposure to a diversified credit portfolio managed via the MA Master Credit Trust. As of 30 June 2026, the portfolio consisted of 137 investment positions spread over 81 channel partners and issuers, offering broad diversification across asset classes and lending segments. The portfolio comprised 54 private market loans and financing warehouse positions, 28 residential mortgage-backed securities (RMBS) and asset-backed securities (ABS) bonds, 54 corporate loans, and a fixed income securities portfolio with 18 holdings across nine issuers. Cash holdings amounted to A$157 million, supporting liquidity.

The underlying fund manager applies a disciplined credit-first investment approach aimed at delivering attractive risk-adjusted returns through market cycles, focusing on credit investments with defensive features including security and structural protections. Utilizing bottom-up credit underwriting and proprietary origination channels, the portfolio seeks resilience in both stable and disrupted market conditions. Asset allocation includes 85% in asset-backed lending and 15% in direct corporate lending. Credit sub-segment exposure is concentrated in senior secured positions (68%), structured secured instruments (30%), and subordinated exposures (2%), reflecting a preference for lower credit risk senior secured assets.

Interest Margin Performance and Yield Characteristics in the Current Rate Environment

The MA Credit Portfolio Notes delivered a quarterly net return of 1.97% for the quarter ending 30 June 2026, consistent with the contractual coupon of the 1-month Bank Bill Swap Rate (BBSW) plus 3.25% per annum. The interest rate applicable from 8 July 2026 to 10 August 2026 was 0.70% (7.56% annualized), reflecting prevailing BBSW levels. The Notes’ yield stood at 7.83% as of 30 June 2026, with a yield to call of 8.42%. The weighted average effective interest margin across the portfolio was 6.2%, with 96% floating rate and 4% fixed rate instruments, providing exposure to rising rates while retaining flexibility if rates decline.

Interest margin distribution aligns with the credit-first philosophy: 42% of assets had margins between 3% and 4%, 20% between 4% and 5%, 16% between 5% and 6%, 9% between 6% and 7%, and 3% above 7%. MA2HA Notes pay interest monthly, offering investors regular cash flow consistent with portfolio earnings. The Notes closed at 94.20 on the reporting date, with a call date of 10 December 2031 and maturity on 10 December 2032. They are accessible via platforms including Netwealth, HUB24, Mason Stevens, Macquarie Wrap, CFS Edge, and BT Panorama for retail and institutional investors.

Capital Buffer Integrity and Credit Risk Metrics Across the Underlying Portfolio

The MA Master Credit Trust’s 5% capital buffer remained fully intact during the quarter ended 30 June 2026, providing protection against credit losses and volatility. As of 30 June 2026, no positions were in non-accrual or 90-plus-day arrears/default status, indicating a performing portfolio without immediate credit stress. This zero-default status applied across both asset-backed and direct corporate lending segments. Loan assets carried a value of 99.99 cents per dollar of recognized loan balance, showing minimal impairments. No positions were amended to capitalize interest instead of paying cash interest; all maintained cash interest payments.

Credit ratings comprised 17% externally rated assets and 83% internally rated by the Manager. External ratings included 7% AA/AAA, 21% A, 43% BBB, 20% BB, and 8% below BB or unrated, indicating predominantly investment-grade external holdings. Internal ratings showed 99.4% performing-neutral risk, 0.4% performing-moderate risk, and 0.1% elevated risk, with no workouts or enforcements, underscoring a low-risk credit profile.

Geographic Diversification and Exposure Mix Between Domestic and International Markets

The portfolio was predominantly Australian-focused, with 92% of assets allocated to Australian investments and 8% to the United States. This allocation leverages the Manager’s home-market expertise and available Australian credit opportunities, while maintaining meaningful international diversification. The asset mix emphasizes Australian asset-backed lending, RMBS, and direct corporate lending across multiple sectors. This concentration aligns with MA Credit Portfolio Holdings Limited’s registered office and the regulatory framework governing the Notes listed on the Australian Securities Exchange.

Within Australia, credit sub-segments are diversified across lending channels and industries: 20% private RMBS, 13% auto finance, 10% supply chain finance, 8% asset and business finance, 5% legal disbursements funding, 5% fleet financing, 4% specialty finance bridging, 3% structured corporate credit, 3% ABS bonds, 3% hospitality and leisure corporate lending, 3% specialty finance insurance premiums, 3% financials corporate lending, 3% healthcare corporate lending, 2% RMBS bonds, and 12% across 18 additional industry segments. This broad diversification mitigates concentration risk and exposes the portfolio to varied economic drivers and credit cycles.

Liquidity Position and Fund Leverage Framework Supporting Ongoing Operations

As of 30 June 2026, total available liquidity in the MA Master Credit Trust was 16.8% of portfolio assets, including 5.1% cash and 11.7% in liquid instruments and facilities. This liquidity supports ongoing expenses, interest payments, investment opportunities, and redemptions without forced asset sales. The Manager maintains adequate reserves while efficiently deploying capital. Asset liquidity and liability maturity profiles are balanced, with 26% of assets maturing within zero to six months, 17% within six to twelve months, 29% within twelve to twenty-four months, 25% within twenty-four to thirty-six months, and 3% beyond thirty-six months.

Leverage metrics indicate zero leverage at both fund and underlying levels. Investment-level financing is selectively used: 2.9% of asset-backed lending assets (2.4% total portfolio) and 29.7% of direct corporate lending assets (4.6% total portfolio) are financed at the investment level, totaling 7.0% of portfolio assets. This conservative leverage approach reduces financial stress and refinancing risk while enabling portfolio scaling through unit issuance or capital contributions. Manager alignment is strong, with direct co-investment exceeding A$240 million, aligning manager and investor interests.

Macroeconomic Environment and Central Bank Policy Settings Influencing Portfolio Performance

Australia’s economy remained stable during the quarter, with GDP growth moderating to 0.3% in Q1 2026. Unemployment eased to 4.4% in May 2026, reflecting labor market resilience despite slower growth. Inflation remained above the Reserve Bank of Australia’s target, with headline CPI at 4.0% and trimmed mean inflation at 3.6% in May. The RBA held the official cash rate at 4.35% in June after a 25 basis-point hike in May, signaling cautious monetary policy amid inflation and energy cost pressures.

In the US, the Federal Reserve maintained its policy rate between 3.50% and 3.75% in June, with headline CPI rising to 4.2% year-over-year in May, partly due to energy prices. The resilient US labor market supports the Fed’s cautious stance on further rate changes. Globally, economic growth remains uneven with restrictive central bank policies and geopolitical uncertainties. Middle East tensions eased late in the quarter, easing oil prices, though risks to energy markets persist. These global factors impact credit market conditions, borrower defaults, and the investment environment for the MA Credit Portfolio.

Portfolio Composition and Position Sizing Reflecting Disciplined Credit Management

The average investment size in the MA Master Credit Trust was A$25.8 million, ranging from A$2.4 million to A$172.3 million, reflecting diverse credit opportunities across asset-backed lending, RMBS, ABS, and corporate lending. The median position size was 0.3% of portfolio assets, with the largest position at 4.9%. The top five investments accounted for 20.1% of assets, and the top ten for 34.0%, indicating no excessive concentration and meaningful diversification.

The portfolio’s 137 positions span 81 channel partners and issuers, reducing issuer concentration risk and enhancing resilience. The mix of 54 private loans and warehouse positions, 28 RMBS and ABS bonds, and 54 corporate loans offers multiple credit return sources, each contributing unique risk-return profiles within the portfolio framework.

Investment Platform Access and Research Recognition Supporting Investor Participation

MA Credit Portfolio Notes (ASX:MA2HA) are accessible via major Australian investment platforms including Netwealth, HUB24, Mason Stevens, Macquarie Wrap, CFS Edge, and BT Panorama, facilitating easy access for retail and institutional investors through familiar channels. This broad platform availability supports integration with existing portfolio management and reporting systems, positioning the Notes as a core fixed income or defensive credit allocation suitable for investors seeking yield with lower volatility than equities.

Independent research provider Lonsec has assigned a "Recommended" rating to MA Credit Portfolio Notes, endorsing the investment structure and management strategy. This third-party validation enhances investor confidence and market profile among financial advisers and institutional investors. Combined platform access, research recognition, and transparent monthly reporting support informed investment decisions for wholesale and retail participants interested in credit-focused fixed income exposure.

Quarterly Return Consistency and Contractual Coupon Alignment With Interest Rate Environment

The 1.97% net quarterly return for the period ended 30 June 2026 aligns with the contractual coupon formula of 1-month BBSW plus 3.25% per annum, demonstrating the portfolio’s ability to deliver returns consistent with stated parameters. This reflects a performing asset mix, interest margin distribution, and effective credit strategy execution amid stable financial conditions and moderating economic growth. The floating rate structure benefits from adjustments in the BBSW component as interest rates fluctuate.

During the quarter, 1-month BBSW ranged from 3.25% in February 2026 to 4.31% in June 2026, with portfolio returns increasing accordingly. The Notes closed at 94.20 at quarter-end. The call date is 10 December 2031, with maturity on 10 December 2032, offering investors a defined investment horizon and issuer call option based on market conditions.