One of the world’s biggest buyers of corporate credit says Australia’s near-$200 billion private capital space is exposed to an uptick in soured loans as companies grapple with borrowing costs that have soared in lockstep with interest rates.

The country’s richest families and institutional investors have piled into private credit through a raft of fund managers, yet the asset class’s popularity runs parallel to a spike in arrears, an alarming rise in loan amendments and corporate restructurings.