The US Securities and Exchange Commission (SEC) is closely monitoring emerging stress signals in the private credit market, including ongoing redemption requests and expectations of higher default rates, according to a report by Bloomberg.
The report cites prepared remarks by Chairman Paul Atkins as highlighting concerns around transparency and valuation practices within the rapidly expanded asset class, noting that opacity remains a key regulatory focus area alongside credit quality and pricing discipline.
“Let me be clear that opacity in this space can be an issue. That valuation, transparency, and credit quality are key,” he said in comments delivered ahead of an appearance at the Economic Club of Washington DC.
Private credit has grown significantly in the post-financial crisis era, as tighter bank lending standards encouraged non-bank lenders and asset managers to step into the leveraged finance market. The sector is now estimated to be worth around $1.8tn, prompting increased scrutiny from policymakers concerned about potential leverage risks and the adequacy of oversight.
Recent market activity has also highlighted investor sensitivity, with some private credit managers reportedly experiencing elevated withdrawal requests and, in certain cases, limiting redemptions as liquidity pressures build. Large alternative asset managers including Apollo Global Management and Ares Management have been among those managing increased investor caution.
Despite these concerns, Atkins also acknowledged the role of private credit in expanding access to financing for borrowers, particularly in areas where traditional banking activity has retrenched. He noted that regulators are also exploring ways to broaden access to private credit for retail investors, provided appropriate safeguards and fiduciary standards are in place.
The comments come as US policymakers continue to evaluate the role of private markets in retirement systems. The Department of Labor recently proposed measures aimed at providing greater legal clarity for retirement plan sponsors investing in alternative assets, including private credit, following broader policy efforts to expand access under previous executive directives.
