Private credit – lending directly to businesses outside the banking system – has ballooned into a $2 trillion industry. But concerns over transparency and lending discipline have rattled confidence.
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The pressure is particularly visible in vehicles open to retail investors – a group private funds have targeted aggressively.
WHAT THE NUMBERS SHOW
Publicly traded business development companies (BDC) – a common way Americans access harder-to-trade assets — trade at an average of 78 cents for every dollar of reported assets. That’s down from 85 cents at the start of this year and about a dollar in early 2025, according to research firm Morningstar.
A discount to asset value signals that investors doubt the assets are worth what the managers estimate.
BIGGEST FUNDS FALL
Most of the 20 biggest BDCs have seen their stock prices fall relative to asset values over the past year, and nearly all now trade at discounts. The sector has also been hit by worries about how artificial intelligence could affect software companies, a major area of lending.
The companies declined to comment or did not respond.
Larger managers say their portfolios remain stable despite market volatility, though some have acknowledged strains. Executives at KKR and Blackstone funds said in February that some borrowers are struggling.
Morningstar’s Jack Shannon said investors appear to believe the sector’s
Private credit funds slide as investors sell out
