Financial Stability Board (FSB) Report on Vulnerabilities in Private Credit 2026: 1) Total Private Credit Lending at $1.5 Trillion to $2 Trillion in 2024, 2) Top 3 Markets are United States ($1 Trillion), Euro Area & UK and Other Small But Sizeable Markets Include Canada, Hong Kong, Japan, Switzerland & South Africa, 3) Definition of Private Credit as Non-Bank Direct Lending to Medium-Sized Companies Negotiated on Bilateral Basis, 4) Potential Vulnerabilities Between Banks & Private Credit and Between Insurers & Private Equity, 5) Retail Investors in Private Credit Increased from Near 0% to 13% in Last 10 Years, 6) Banks Provide Financing to Private Credit Funds, Borrowers & Investors, 7) Banks Engage in Synthetic Risk Transfers to Manage Credit Risk on Balance Sheet and Allow Others to Take on Credit Risks via Credit-Linked Notes or Credit Default Swaps, 8) Banks May Also Invest in Private Credit CLOs & Provide Warehouse Financing to CLO Managers, 9) Member Banks Report Less than 0.5% of Total Bank Assets with Direct Lending Exposure to Private Credit Funds, 10) Outright Loan Defaults at Around 1% But Around 5% Defaults if Including Restructuring Transactions, 11) Private Credit Valuations Based on Income Approach or Market Approach (Peer Comparison), 12) Other Vulnerabilities Include Cross-Border, Leverage & Liquidity Mismatches
10th May 2026 | Hong Kong
Financial Stability Board (FSB) Report on Vulnerabilities in Private Credit 2026 – 1) Total private credit lending at $1.5 trillion to $2 trillion in 2024, 2) Top 3 markets are United States ($1 trillion), Euro area & UK and other small but sizeable markets include Canada, Hong Kong, Japan, Switzerland & South Africa, 3) Definition of private credit as non-bank direct lending to medium-sized companies negotiated on bilateral basis, 4) Potential vulnerabilities between banks & private credit and between insurers & private equity, 5) Retail investors in private credit increased from near 0% to 13% in last 10 years, 6) Banks provide financing to private credit funds, borrowers & investors, 7) Banks engage in synthetic risk transfers to manage credit risk on balance sheet and allow others to take on credit risks via credit-linked notes or credit default swaps, 8) Banks may also invest in private credit CLOs (Collateralized Loan Obligations) & provide warehouse financing to CLO managers, 9) Member banks report less than 0.5% of total bank assets with direct lending exposure to private credit funds, 10) Outright loan defaults at around 1% but around 5% defaults if including restructuring transactions, 11) Private credit valuations based on income approach or market approach (Peer comparison), 12) Other vulnerabilities include cross-border, leverage & liquidity mismatches. Announcement (6/5/26): “The Financial Stability Board (FSB) today published a report on financial stability vulnerabilities in private credit. This activity has grown rapidly, to an estimated $1.5-2.0 trillion in assets at end-2024 and is heavily concentrated in a few jurisdictions. Notwithstanding the benefits private credit brings, in the form of tailored finance for companies and diversification for investors, it also embeds several vulnerabilities.” View report here
“ Financial Stability Board (FSB) Report on Vulnerabilities in Private Credit 2026: 1) Total Private Credit Lending at $1.5 Trillion to $2 Trillion in 2024, 2) Top 3 Markets are United States ($1 Trillion), Euro Area & UK and Other Small But Sizeable Markets Include Canada, Hong Kong, Japan, Switzerland & South Africa, 3) Definition of Private Credit as Non-Bank Direct Lending to Medium-Sized Companies Negotiated on Bilateral Basis, 4) Potential Vulnerabilities Between Banks & Private Credit and Between Insurers & Private Equity, 5) Retail Investors in Private Credit Increased from Near 0% to 13% in Last 10 Years, 6) Banks Provide Financing to Private Credit Funds, Borrowers & Investors, 7) Banks Engage in Synthetic Risk Transfers to Manage Credit Risk on Balance Sheet and Allow Others to Take on Credit Risks via Credit-Linked Notes or Credit Default Swaps, 8) Banks May Also Invest in Private Credit CLOs & Provide Warehouse Financing to CLO Managers, 9) Member Banks Report Less than 0.5% of Total Bank Assets with Direct Lending Exposure to Private Credit Funds, 10) Outright Loan Defaults at Around 1% But Around 5% Defaults if Including Restructuring Transactions, 11) Private Credit Valuations Based on Income Approach or Market Approach (Peer Comparison), 12) Other Vulnerabilities Include Cross-Border, Leverage & Liquidity Mismatches “
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Financial Stability Board (FSB) Report on Vulnerabilities in Private Credit 2026: 1) Total Private Credit Lending at $1.5 Trillion to $2 Trillion in 2024, 2) Top 3 Markets are United States ($1 Trillion), Euro Area & UK and Other Small But Sizeable Markets Include Canada, Hong Kong, Japan, Switzerland & South Africa, 3) Definition of Private Credit as Non-Bank Direct Lending to Medium-Sized Companies Negotiated on Bilateral Basis, 4) Potential Vulnerabilities Between Banks & Private Credit and Between Insurers & Private Equity, 5) Retail Investors in Private Credit Increased from Near 0% to 13% in Last 10 Years, 6) Banks Provide Financing to Private Credit Funds, Borrowers & Investors, 7) Banks Engage in Synthetic Risk Transfers to Manage Credit Risk on Balance Sheet and Allow Others to Take on Credit Risks via Credit-Linked Notes or Credit Default Swaps, 8) Banks May Also Invest in Private Credit CLOs & Provide Warehouse Financing to CLO Managers, 9) Member Banks Report Less than 0.5% of Total Bank Assets with Direct Lending Exposure to Private Credit Funds, 10) Outright Loan Defaults at Around 1% But Around 5% Defaults if Including Restructuring Transactions, 11) Private Credit Valuations Based on Income Approach or Market Approach (Peer Comparison), 12) Other Vulnerabilities Include Cross-Border, Leverage & Liquidity Mismatches
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