According to a report by the Bank for International Settlements, cited by Bloomberg, private credit’s push to attract retail investors is increasing the sector’s vulnerability to liquidity mismatches similar to those seen in traditional lenders.
Direct lenders typically offer long-term loans that align with the duration of their funds, enabling the industry to argue that private credit doesn’t pose systemic risk. However, money managers are increasingly using structures that allow retail investors to redeem portions of their investments regularly, raising concerns about potential liquidity strains during market turmoil.
“The growing role of insurance companies and retail investors, as well as funds’ leverage and portfolio concentration, warrant monitoring,” the report stated. “This is especially relevant given the increasing interlinkages between banks an
