The Rise and Risks of Private Credit
The IMF's chapter on private credit is the most rigorous neutral assessment of the asset class: how it works, who borrows and lends, and where the risks sit, from fragile borrowers to stale valuations.
Free to read
Most writing on private credit comes from firms that manage it. This chapter of the IMF's April 2024 Global Financial Stability Report is the standard neutral reference. It explains how private credit works, mainly as lending to mid-sized firms outside banks and public bond markets, and shows how the market grew to rival other major credit markets in size.
The chapter then sets out the risks supervisors worry about: borrowers that are smaller and more leveraged than those in public markets, valuations that update slowly, semi-liquid funds offering redemptions on illiquid loans, layers of leverage across funds, investors and portfolio companies, and opaque links between private credit funds, banks and insurers.
Read it after a firm-written primer to get the other side of the story. The shorter executive summary is a good starting point, and the IMF landing page also has the underlying data. It remains the reference point for debates about private credit and financial stability.