Private credit's mark-to-model problem
An asset class that grew up in a decade of falling defaults is now being tested on the one thing it never had to prove: how it prices a loan that is going wrong.
Section
Private Credit
Direct lending: valuation, liquidity, and marks that never have to face a market.
Who lends to the lenders
Direct lending funds are described as unlevered vehicles making senior loans. The leverage sits one level up, and it is where banks re-entered the business they left.