Private Credit Faces Liquidity Risks If Stress Rises, IMF Says

Regulators should scrutinize the fast-growing private-credit market more closely, given potential concerns ranging from demands on funds’ liquidity to the quality of underlying borrowers, the International Monetary Fund said in a report.

The study, released Monday as part of an IMF report on global financial stability, outlines the $1.7 trillion sector’s critical role in debt markets, and points to possible risks which are difficult to fully ascertain given the lack of information and transparency.

Private credit also remains largely untested in an economic slump, according to the analysis. It caters to mostly small and mid-size borrowers with higher leverage, implying ...