SEC issues “critical reminder” on private credit valuations
The US financial regulator has issued a “critical reminder” that the industry must maintain rigour in valuing private assets, particularly private credit, as the pool of investors in the asset class grows.
The Securities and Exchange Commission (SEC) said the statement concerned existing requirements rather than new rules. However, it stressed to industry participants the importance of how assets are valued, and how those valuations and the assets’ risk characteristics are disclosed to investors.
“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 recognised private assets measured at fair value,” Kurt Hohl, the SEC’s chief accountant, and Brian Daly, director of its division of investment management, said in the joint statement.
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The statement comes as private credit valuations have been in the limelight for some time, with recent high-profile defaults, software-loan markdowns and redemption caps testing whether the models behind them are keeping pace with reality.
The scrutiny also comes as the industry looks to offer private credit strategies in retirement accounts, with more retail investors gaining exposure to the growing asset class.
The SEC said private credit was the area requiring “particular care”, given its rapid growth. Private credit investments held in registered fund portfolios have grown by nearly 60 per cent, from $170bn (£128.4bn) in December 2020 to $270bn in December 2025, the body said.
It said private credit assets can be difficult to value because they are illiquid and lack readily available quoted prices.
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The regulator added that auditors also play a role in ensuring the credibility of the information investors receive on the fair value of private credit assets.
“Management, boards, valuation designees, and auditors each serve important roles in ensuring that the financial reporting used by investors reflects the rigour, transparency, and investor focus that the existing legal and regulatory frameworks contemplate,” Daly and Hohl said.
