UK Explores Private Credit Stress Tests as Bailey Warns of Risks

The Bank of England has begun industry outreach about stress testing the private credit market, as Governor Andrew Bailey warned of eerie parallels with the run-up to the financial crisis.

The UK central bank is planning a “system-wide exploratory scenario” on the broad private credit market, using a similar model to last year’s review of risks to core UK financial markets, Bailey and Deputy Governor Sarah Breeden said Tuesday, confirming an earlier Bloomberg News report.

Speaking in Parliament, Breeden said the “aim of the system-wide exercise is to shine a light on what’s currently opaque and try and understand the ...