The valuation hangover
Private credit has been having a moment for years — now it’s getting the adult-in-the-room treatment. New York District Attorney Jay Clayton says his team is digging into inconsistencies in how funds mark their assets, pointing to the gap between balance-sheet valuations like 75 versus 95 as exactly the kind of thing that raises eyebrows.
That matters because in private credit, the number on the page isn’t just a number. It can shape fees, reported performance, investor confidence, and whether clients feel like they’re buying a sturdy loan portfolio or a magic trick.
Why investors should care
The worry here isn’t just one busted borrower. It’s the broader question of whether the private credit boom has been priced with enough caution. Clayton linked the issue to bankruptcies such as 777 Partners, Tricolor Holdings, and First Brands Group, which is regulator-speak for: the recent stress may not be isolated.
And this isn’t happening in a vacuum. The SEC has already signaled it’s watching private funds closely, and regulators across the Treasury and Fed are also sniffing around the space. That’s not exactly the kind of group chat you want your industry featured in.
Apollo in the crosshairs, indirectly
Apollo Global Management gets name-dropped because it sits near the center of the private credit universe. The article also notes the firm expects wealthy clients to keep asking for cash back after months of net outflows — a reminder that when confidence gets wobbly, redemption requests can turn into the financial version of everyone heading for the exit at once.
Big picture: private credit may still be lending money and supporting the economy, but the “trust us” phase is starting to look a little more like “show your work.”