What We Still Don’t Know About Private Credit Is Troubling

What’s going on in the $3 trillion private credit sector? To understand, let’s start with a sampling of the recent news that’s put investors on edge:

These are not isolated incidents. They are the emerging pattern of an asset class entering its first serious credit cycle. That’s to be expected, but in an ominous echo of past financial crises, no one is sure just how much banks’ lending exposure to private credit funds could end up costing the financial system and economy in a shake-up. Estimates vary markedly because there’s no systematic or centralized reporting, no consensus definition of “private credit,” and no way to trace various indirect exposures.