SEC monitoring ’emerging pressures’ in private credit space

The Securities and Exchange Commission is closely monitoring the “emerging pressures” in the private credit market as redemption requests persist amid rising default-rate projections, Chairman Paul Atkins said in prepared remarks.

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“Let me be clear that opacity in this space can be an issue. That valuation, transparency, and credit quality are key,” Atkins said in remarks ahead of an interview with David Rubenstein at the Economic Club of Washington, D.C.

The private credit market ballooned due to tighter lending standards at traditional banks following the 2008 financial crisis. As the market has grown, some lawmakers and regulators have raised concerns about oversight of the $1.8 trillion market and potentially hidden leverage.

Funds managed by firms such as Apollo Global Management and Ares Management have recently experienced a surge in withdrawal requests as customers grow skittish about the market, with some firms blocking investors from getting all their money out.

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Atkins also said on Tuesday that private credit has also helped fill a credit gap, and the SEC is working to advance the broader administration’s aim to expand access to it for retail investors “guided by their fiduciaries.”

The U.S. Department of Labor unveiled a plan on March 30 to give more legal protection to companies offering alternative assets like private credit in retirement savings plans. The proposal followed President Donald Trump’s executive order last year easing access to alternative assets that also instructed the SEC to explore rulemaking in that area.