Two funds disclosed marks on the same underlying loan eleven points apart. The loan has one set of cash flows and one borrower. The divergence is entirely a function of valuation process.
Private credit marks are model-driven and manager-influenced by design. That is defensible while the loans perform. It becomes a governance question the moment redemptions or a secondary sale forces a price discovery event.
A mark is an opinion until someone tries to sell.
The asset class has grown enormously without experiencing a broad default cycle. Underwriting quality is asserted rather than observed, because the observation requires a downturn that has not arrived.
Semi-liquid vehicles marketed to individual investors are the pressure point. Their redemption terms assume an orderly secondary market that has never been tested at scale.
