Through 2026 the official bodies moved from monitoring to warning to a federal probe, within months.
International. The FSB published its "Vulnerabilities in Private Credit" report (May 6), flagging patchy loan-level data, valuation subjectivity and "circles of risk" where banks fund the funds. The IMF warned selective default rates could run 2-3x higher under stress. The Bank of England's Sarah Breeden ran industry stress tests and warned private credit could tip into a "market for lemons" (Akerlof's adverse-selection idea, the same shape as 2008 subprime). The ECB (Financial Stability Review, May 27) named US private credit a spillover risk to the euro area.
US supervisors. The OCC warned that PIK and restructurings "may mask underlying credit deterioration"; the Fed formally queried major banks on their exposure; and the DOJ (Manhattan US Attorney) opened a probe into valuation marks at a BlackRock private-credit fund. The common thread is opacity - when there is no market price, the mark is the manager's own number.
Full sourced analysis: https://www.tigzig.com/post/private-credit-market-for-lemons-may2026. Private-credit hub: https://www.tigzig.com/private-credit.
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