Private credit gained popularity after the 2008 financial crisis, becoming an increasingly important source of financing for mid-cap companies as banks faced strict capital requirements. However, unlike public debt markets, private credit remains relatively opaque, with limited disclosures, inconsistent reporting standards and a lack of transparency in portfolio-level risks.

Recent distress events, including the announcements of First Brands’ and Tricolor’s bankruptcies, have highlighted the challenges of assessing risk in private markets. The challenges intensified when funds, including Blue Owl Capital and BlackRock, capped redemptions. As the markets continue to grow, regulators are increasingly focused on understanding where risks reside and how stress could propagate through the financial system.