Private Credit Valuations Move Into the SEC Spotlight
Featured In: FundFire
Shane McGreevy, Compliance Consultant at STP Investment Services, was featured in a recent FundFire article examining the SEC’s increased focus on private credit valuations, redemptions, liquidity, and investor protection within its 2027 examination priorities.
The focus comes as private credit continues expanding within registered investment vehicles. SEC staff recently reported that private credit investments within registered fund portfolios increased from approximately $170 billion in December 2020 to $270 billion in December 2025.
Read the original article on FundFire.
The Bigger Picture
Private credit presents a unique valuation challenge because the underlying loans are typically illiquid, individually negotiated, and not traded on established secondary markets. As a result, managers often cannot rely on readily available quoted market prices when determining fair value.
That complexity is becoming increasingly important as private credit exposure grows in registered funds and private market strategies become more accessible to individual investors.
In September 2026, SEC staff issued a statement specifically addressing fair value measurement and disclosures for private assets. The guidance emphasized that growth in private credit requires continued rigor around how assets are valued and how their risk characteristics are communicated to investors.
The SEC’s attention therefore extends beyond the valuation number itself. Firms should be prepared to support the methodologies, assumptions, information, and governance processes underlying those valuations.
Key Takeaways
- Private credit valuations are receiving increased regulatory attention.
- Illiquid private loans present distinct valuation challenges because observable market prices may not be readily available.
- Valuation processes should appropriately consider changing market and credit conditions.
- Liquidity, redemptions, disclosures, fees, and conflicts can intersect with valuation risk.
- Growing retail participation increases the importance of transparent valuation and risk disclosures.
- Strong documentation and governance can help firms demonstrate the reasoning behind fair value determinations.
Shane McGreevy’s Perspective
According to Shane McGreevy, examiners may be interested in much more than the current value assigned to a private credit position.
“Managers should expect questions not just about what a private credit position is worth today, but how they arrived at that valuation, how frequently it is challenged, what happens to the valuation when market conditions deteriorate, and whether the fund can actually meet its liquidity obligations without disadvantaging remaining investors.”
— Shane McGreevy, Compliance Consultant, STP Investment Services
Shane McGreevy also highlighted the effect changing interest-rate conditions can have on borrowers and the importance of ensuring valuation methodologies remain responsive:
“An examiner may therefore be interested in whether valuation methodologies are sufficiently responsive to changing credit and market conditions rather than simply producing stable marks.”
— Shane McGreevy, Compliance Consultant, STP Investment Services
What This Means for Private Credit Managers
For private credit managers, valuation should increasingly be viewed as an ongoing governance process rather than simply a periodic calculation.
Unlike publicly traded assets with observable market prices, private credit positions may require managers to use significant judgment when determining fair value. SEC staff guidance emphasizes that a lack of timely borrower information does not remove management’s responsibility to estimate fair value. It also notes that broader information such as prevailing credit spreads, liquidity conditions, and the compensation market participants would require for assuming risk may need to be considered when relevant.
Liquidity adds another dimension. When funds provide investors with redemption opportunities while holding less-liquid assets, managers need to understand how valuation, portfolio liquidity, and investor treatment interact.
As private credit continues moving further into registered and retail-accessible structures, those processes may receive even greater attention.
Action Steps for Compliance Leaders
- Review private credit valuation policies and supporting documentation.
- Assess how frequently valuations and underlying assumptions are challenged.
- Evaluate how valuation methodologies respond to changing interest rates, credit conditions, and borrower performance.
- Review liquidity and redemption procedures for funds holding illiquid assets.
- Evaluate disclosures around valuation methodology, liquidity, fees, and material risks.
- Review processes for identifying and addressing potential conflicts of interest surrounding valuation.
These are practical considerations based on the issues raised in the article and SEC guidance, not new requirements created by this post.
Frequently Asked Questions
Why is private credit difficult to value?
Private credit investments are generally individually negotiated, illiquid loans that do not trade on established secondary markets and therefore often lack readily available quoted prices.
Why is the SEC focused on private credit valuations?
SEC staff has pointed to the growth of private credit in registered fund portfolios and has emphasized the importance of rigorous valuation and transparent risk disclosures as private assets become more accessible.
What factors can affect a private credit valuation?
SEC guidance notes that valuation may require consideration of borrower information as well as reasonably available market information, including prevailing credit spreads and liquidity conditions.
How do liquidity and valuation interact?
A fund’s ability to meet redemption obligations can become particularly important when the underlying portfolio contains assets that are difficult to trade or price.
Why does documentation matter?
Strong documentation can provide support for the assumptions, methodologies, data, and governance underlying a firm’s fair value determinations.
Do the SEC’s valuation comments create new requirements?
The SEC’s September 2026 staff statement reinforces existing accounting and disclosure requirements rather than creating new legal obligations.
Why It Matters
As private credit grows and becomes accessible through a wider range of investment vehicles, valuation practices will play an increasingly important role in investor protection and regulatory oversight.
For managers, a defensible valuation framework goes beyond producing a number. Firms should be prepared to demonstrate the methodology behind that number, how it incorporates changing market conditions, how assumptions are challenged, and how valuations interact with liquidity and investor treatment.
As scrutiny increases, thoughtful governance, documentation, and transparency can help firms demonstrate that their valuation processes reflect the underlying economics of their private credit investments.
