Centuria Capital ASXCNI|Fund Rated Uninvestable as Centuria Fires Back

The downgrade that surfaced the Bathla exposure

Centuria Capital Group's Bass Credit Fund has just been downgraded by SQM Research, from a high investment grade 4 star rating to a non investment grade 3.25 stars. SQM Research is the ratings house financial advisers actually use to recommend products to clients, so this is not a background footnote.

SQM confirmed the cut but did not disclose the reasoning behind it. What it did flag, according to reporting, was alarm at changes to the fund's own lending guidelines, tied to its exposure to a Sydney property developer called Bathla Group.

The Bass Credit Fund runs six first mortgage loan facilities to Bathla. Two are construction loans, one of which Centuria says is substantially complete, and the rest are residual stock or land loans, all still accruing interest. The fund itself sits on a 272 million dollar net asset value, and returned 8.76 percent over the year to June.

Centuria moved fast to separate two things investors were conflating. It is not a unitholder in the Bass Credit Fund, and its only direct balance sheet exposure to Bathla is a single 4.5 million dollar loan facility. On paper, that is a contained number against a rating agency calling the fund uninvestable.

The rebuttal versus the silence

The downgrade arrived alongside a second, sharper claim: that a Centuria Bass Credit employee, David Stone, had a conflict of interest through his prior work at Bathla. Centuria's rebuttal names him directly rather than deflecting.

Centuria says the lending relationship with Bathla predates Stone by more than three years, and that he joined Centuria Bass Credit only in April 2025 after twelve months at a Bathla entity. It states he holds no ownership stake in Bathla and no vote on the fund's investment committee.

Here is where the paradox sharpens. Centuria's numbers are specific and falsifiable, a name, a date, a dollar figure. SQM's downgrade is the opposite: a conclusion without a published methodology. Two sources, one fact set, two completely different verdicts on what it means for the fund's governance.

Centuria says it will engage constructively with SQM and seek clarification, and correction where required. That is a company confident enough to demand the rating agency show its work, not one quietly absorbing the hit.

Alceon walked away. Centuria didn't.

Bathla Group is not new to lender scrutiny. Private credit firm Alceon ended its decade long relationship with the developer in January this year, after reportedly extending lending through mid 2025 and staying comfortable with the loans through project completion, according to its own account.

Centuria's own account runs in the same direction on one specific deal: it evaluated a 440 million dollar refinancing of Bathla's loan portfolio and did not proceed, because it could not get comfortable with the security being offered.

That is the contrast that matters more than the star rating. Every lender that has looked closely at Bathla's numbers, Alceon in January, Centuria on the 440 million dollar deal, has walked away from the bigger exposure. Centuria's remaining six loan facilities are what's left after that filtering, not what's left despite it.

The residual risk is real, not manufactured. Separate reporting says allegations that Bathla misled lenders on loan applications have reached the corporate regulator, with other financiers said to be reviewing their own exposure. Bathla denies this. That denial is currently untested.

What actually confirms which reading is right

The single cleanest discriminator here is not the star rating itself, it's whether SQM Research follows through and publishes the specific reasoning and figures behind the downgrade. If it does and the numbers match Centuria's disclosure, the downgrade reads as an overreaction to reputational noise.

The trap condition runs the other way. If Centuria discloses a new loan facility to Bathla beyond the six already named, or if any of the existing construction, stock or land loans miss an interest payment, the downgrade stops looking premature and starts looking early.

A Centuria unitholder or shareholder should watch the next ASX update on the Bass Credit Fund's loan book for any change in facility count or accrual status. A watch list investor considering entry should wait specifically for SQM's promised clarification, not for the next earnings result, since that is the checkpoint that actually resolves the dispute. Until one of those two prints, this stays an open question rather than a verdict.