WASHINGTON — The Securities and Exchange Commission issued a reminder Monday urging firms to provide investors with thorough disclosures about their investments in private credit as the market continues to grow and draw more regulatory scrutiny.
The agency called on companies to "maintain rigor" in valuing private assets and provide all relevant details about the risks those assets might have and how public firms arrive at their valuations.
"The growing accessibility of private assets, including private credit, calls for a critical reminder that registrants maintain rigor over how these assets are valued and how those valuations and asset risk characteristics are disclosed to investors," the agency said.
The SEC said a review of registrants' filings showed significant growth in private credit in recent years. Private credit investments in registered fund portfolios grew from $170 billion in December 2020 to $270 billion in December 2025, an increase of nearly 60%, the agency said.
"As markets continue to develop and evolve, disclosure of the context around the basis for valuations and inherent uncertainties can be material for investors to evaluate recognized private assets measured at fair value," the SEC said.
The agency noted that private credit assets are illiquid, individually negotiated loans that are not traded on established secondary markets. That makes quoted valuations harder to verify and requires a "degree of judgment," the agency said.
"This judgment and the inherent complexity in valuing these assets calls for thoughtful policies and procedures designed to estimate fair value and to provide clear disclosure to investors," the SEC said.To improve those disclosures, the SEC said firms should consider broader market conditions when valuing private assets rather than relying solely on their own assessments. Companies should also explain how they value private credit, including the key assumptions and inputs they use and how changes to those inputs could affect valuations.
The agency added that disclosures relying on "boilerplate" language may not provide investors with enough context about the valuation techniques and inputs used to measure private credit assets.
"Clear, entity-specific disclosure helps investors better evaluate the judgments underlying these fair value measurements," the agency said.
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The SEC also said companies should give investors a clearer picture of the risks and performance of their private credit portfolios, including changes such as restructurings, nonperforming loans and nonaccruals. Firms should also explain how much of their reported income comes from payment-in-kind, or PIK, interest, which may signal greater credit risk.
The SEC's warning comes as
Banks' involvement in the market has already grown over the past decade, although the full extent of those ties is difficult to measure.
