Retail Push Threatens to Undermine Private Credit, BIS Warns

The private credit industry’s push to attract retail investors threatens to undermine the high returns that have made the asset class so successful, the Bank for International Settlements warned.

Retail investors typically require high levels of liquidity, which is difficult to achieve in a private credit fund, where loans with a maturity of 5-7 years are often held for their duration. The mismatch, that has already been flagged by some regulators, was highlighted in BIS’s July bulletin.

“All in all, ‘democratizing’ access to private credit may undermine the very features that have sustained its growth,” the BIS analysts including Iñaki ...