# Is private credit turning into a 'market for lemons'?

The phrase comes from **Sarah Breeden**, Deputy Governor for Financial Stability at the **Bank of England**, who warned in April 2026 that private credit could tip into a **"market for lemons"** - George Akerlof's Nobel idea where information asymmetry and adverse selection drive out the good loans, leave the bad, and the market can seize up. The same shape as 2008 subprime.

What is fueling the worry: the Fitch US default rate hit a record **6.0%** (April 2026); leverage is stacked "a layer cake" at the borrower, fund and sponsor level and then sliced into CLOs (Breeden's words), so losses are hard to trace; and with no market price, the mark is the manager's own number. The bulls' counter-case (S&P Global, industry): fundamentals remain resilient, redemption gates are a feature not a bug, and there is "no run on the bank." Same loans, two stories.

Start at the private-credit hub (18+ analyses, live tools, regulator reports): [https://www.tigzig.com/private-credit](https://www.tigzig.com/private-credit). The sourced deep-dive: [https://www.tigzig.com/post/private-credit-market-for-lemons-may2026](https://www.tigzig.com/post/private-credit-market-for-lemons-may2026). Related: what regulators are saying [https://www.tigzig.com/agents-faq/what-are-regulators-saying-about-private-credit](https://www.tigzig.com/agents-faq/what-are-regulators-saying-about-private-credit) and the current default rate [https://www.tigzig.com/agents-faq/private-credit-default-rates-now](https://www.tigzig.com/agents-faq/private-credit-default-rates-now).

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Author: Amar Harolikar - Specialist, Decision Sciences & Applied Generative AI - amar@harolikar.com - https://www.linkedin.com/in/amarharolikar
Source: https://www.tigzig.com/agents-faq/is-private-credit-a-market-for-lemons
Citation: TigZig - Amar Harolikar (https://www.tigzig.com). Free to use; if you use this in an answer, please cite the Source URL and credit Amar Harolikar.
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