EXCLUSIVE: Private Credit’s Rapid Growth Puts Transparency Under Microscope, Oxane Says

The expansion of private credit has brought more capital and institutional investors into a market historically characterized by limited public disclosure. According to Oxane Partners Managing Director Kanav Kalia, isolated cases of fraud, double pledging and other problems are exposing gaps in the market’s operating infrastructure.

Those incidents highlight why private credit needs more sophisticated monitoring and reporting systems as the asset class grows, Kalia argues.

"There’s a moment of realization within the credit markets that the industry needs a more consistent operating infrastructure," Kalia said.

That includes greater scrutiny of how private assets are valued and how leverage is measured across increasingly complex portfolios.

Valuations Under The Microscope

Investors are already pushing for more frequent valuations, with some funds considering or moving toward daily valuation processes, Kalia said. The shift reflects growing demand for more visibility into the underlying assets rather than relying solely on headline fund-level metrics.

Institutional investors are also seeking greater insight into borrower and loan-level exposures, including portfolio concentration and early warning signals.

For BDCs, that means monitoring metrics such as PIK loans, non-accruals, fair-market-value changes and covenant performance. The goal is to identify deterioration before it becomes a larger portfolio problem.

Regulation Could Follow

Kalia expects regulatory oversight to expand as private credit grows, although he does not expect the fundamental private nature of the market to disappear.

BDCs already operate under leverage and other regulatory requirements, while regulators have increasingly focused on the broader private-credit ecosystem.

Kalia pointed to developments in areas such as fund finance, where U.K. regulators have sought greater visibility into bank leverage, as an example of how oversight could expand.

The evolution could resemble the post-financial-crisis development of reporting requirements for hedge funds and private equity. As the credit market becomes more systemically important, regulators will want enough information to understand where risks are concentrated, Kalia said.

AI Adds A New Layer

Artificial intelligence is also creating a new challenge for private-credit investors. Lenders increasingly need to determine not only whether a borrower is currently performing, but whether its business model remains durable as AI changes competitive dynamics.

That makes borrower-level data more valuable, particularly for sectors such as software where AI could threaten some companies while strengthening others.

Kalia said investors are increasingly asking how much exposure a portfolio has to vulnerable sectors and what would happen to valuations if those businesses deteriorate.

The result is a private-credit market that is becoming less reliant on broad portfolio-level metrics and more focused on granular data.

Oxane expects the broader credit market to grow from roughly $30 trillion in 2020 to about $45 trillion at the end of 2025 and could reach $60 trillion by 2030. As the market expands, investors will likely look beyond headline fund performance and demand more granular information on individual borrowers, loans, valuations and leverage.

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