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PensionsMay 13, 2024

Google Cloud Accidentally Deletes Australian Superannuation Fund’s Data

The $83 billion UniSuper saw its operations disrupted over the accident.

The Australian superannuation fund UniSuper had its private cloud data deleted accidentally earlier this month, disrupting the fund’s services for the past couple of weeks. A configuration problem caused Google Cloud to delete UniSuper’s account.

UniSuper, which has AUD 125 billion ($82.73 billion) in assets serving more than 615,000 beneficiaries, is working with Google Cloud to restore and backup the fund’s data. UniSuper said in a statement that it had backups of its data with a separate provider. UniSuper’s systems first went down close to two weeks ago, with it later confirmed the fund’s private cloud was accidentally deleted by Google Cloud.

UniSuper has maintained that the outage was not related to a breach and that at no time was member data accessed or at risk of being accessed. The Australian Prudential Regulation Authority, the prudential regulator of the Australian financial services industry, last week said it was monitoring the outage.

Most UniSuper services are now back online, according to a statement released on Monday from UniSuper CEO Peter Chun. As of Monday, the fund’s website and mobile services have been restored, although the system outage has still shut down some of the fund’s resources, such as a retirement calculator.

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As of Monday, UniSuper members could view their account balances, view their investment performance and request withdrawals, but account balances for members are not up to date due to the system outages.

“UniSuper and Google Cloud understand the disruption to services experienced by members has been extremely frustrating and disappointing. We extend our sincere apologies to all members. While supporting UniSuper to bring its systems back online, Google Cloud has been conducting a root cause analysis,” Chun and Google Cloud CEO Thomas Kurian said in a joint statement last Wednesday.

According to Kurian, the incident occurred when “an inadvertent misconfiguration during provisioning of UniSuper’s Private Cloud services ultimately resulted in the deletion of UniSuper’s Private Cloud subscription.”

Google said that the “one-of-a-kind occurrence” had never happened with any of its other clients. According to UniSuper, the fund had duplicate data in two geographies. However, the accidental deletion of the fund’s private cloud subscription caused deletion of its data across both geographies.

With reporting from Financial Standard, which like CIO, is also owned by ISS Stoxx.

Private Credit Downgrades Rise Among Mid-Sized Companies, Says KBRA

Among a sampling of them, 21% had first quarter demotions, striking a possibly worrisome note for a key part of the economy.

By Larry Light

One result of higher interest rates and market hardships lately: an increase in private credit downgrades among mid-sized businesses that have borrowed in that market. In this year’s first quarter, 21% of middle-market companies in a representative sampling were downgraded, compared with 13% in 2023’s final period, according to rating agency KBRA.

In a report, Kroll Bond Rating Agency cited mounting pressures on middle-market borrowers “as they navigate through the current period of higher rates, weaker equity valuations, and slower mergers and acquisitions activity.”

The middle market is generally defined as businesses with between $10 million and $1 billion in yearly revenue. These companies tend to use private credit because the bond market and banks are hard for them to access. For investors in private credit, via limited partnerships, the KBRA findings merit attention.

KBRA characterizes its latest credit assessment as a snapshot of these companies, which account for an estimated one-third of U.S. gross domestic product. KBRA studied two separate lists of more than 400 companies each over two years in an attempt to shine light on “opaque” private lending to mid-sized outfits. All of the companies studied are below investment grade and not publicly traded. KBRA does not publicly announce individual grades for the companies.

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Despite its concerns about loans to these businesses, KBRA pointed out that no big crisis was identified brewing for them. Defaults “remain muted,” the report stated, adding that just eight companies in its sample defaulted in each of the last two quarters. They were different companies each time.

What sector had the most defaults? Seven of the 16 total defaults in the last two quarters were in health care services and four in software. The report cautioned that “the count of total defaults is too small to draw any significant conclusions.” It added that defaults “appear to be idiosyncratic and not clustered around company size, with total revenues ranging from under $10 million to over $900 million.”

Among credit assessment changes in the sample, downgrades dominate. The ratio of upgrades to downgrades in the first quarter was 0.46, down from about even in 2023’s fourth quarter, which was 1.02. The largest number of shifts in grades, both up and down, came in the B- category.

Related Stories:

Why Private Credit May Not Be as Good as It Looks

Private Credit Is Changing Everything, Even Bankruptcy

Stock Market Slumps Amid S&P’s Bank Downgrades

Tags: defaults, downgrades, Economy, Interest Rates, KBRA, Kroll Bond Rating Agency, middle market, Private Credit

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