Private credit gets a closer look. Good.

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WAKING UP AT LAST: It’s a start, I suppose; $2.1 trillion later, and people are starting to catch on: 


The private credit market “warrants closer watch” amid rapid growth of what the International Monetary Fund said was an “opaque and highly interconnected segment of the financial system.”

The fast-growth asset class could “heighten financial vulnerabilities given its limited oversight,” according to a blog post published on April 8 and co-authored by Charles Cohen, an adviser in the IMF’s monetary and capital markets department . . .

About three-quarters of the more than $2.1 trillion in assets is in the U.S., representing a market share that is nearing that of syndicated loans and high-yield bonds. The fast-growing market has seen institutional investors “eagerly” investing in strategies that, although illiquid, offer high returns and less volatility, the blog said. . . .

[T]he migration of lending from regulated banks and public markets, to more opaque private credit “creates potential risks. Valuation is infrequent. . .” the IMF said. [Emphasis added.]

I especially enjoy the “valuation is infrequent” warning there at the end. These people seem to not understand that, to private credit investors, that’s a feature, not a bug.