Private Markets Alert Newsletter

✍️ Op-Ed: When the Oversight Arrives, the Easy Phase Is Over

The private credit industry spent the better part of a decade operating in a regulatory white space — too large to ignore, too opaque to regulate cleanly, too useful to restrict. That phase ended this week. The Democratic faction of the House Financial Services Committee sent formal inquiries to Blackstone, Ares, Apollo, KKR, Blue Owl, BlackRock, and Carlyle — demanding answers on fund marketing, valuation practices, leverage, fee structures, and BDC management. Congressional scrutiny at this level, targeting this many firms simultaneously, is not a fishing expedition. It is the opening move in a structural oversight campaign.

The timing is not incidental. The Democratic minority is deploying oversight as its primary policy tool precisely because the Republican majority controls the legislative agenda and is pushing in the opposite direction — opening 401(k)s to alternatives, loosening fiduciary rules, and signalling institutional support for the asset class. Congressional Democrats have found the natural pressure point: if the Trump DOL will not restrict private credit's expansion into retail channels, then the information-gathering mechanism of committee inquiry becomes the lever. The industry should expect these inquiries to generate public reports, hearings, and — in time — legislative proposals from the minority. The CRS has already published a formal research note flagging private credit's structural vulnerabilities to congressional staff.

What the industry cannot do is treat this as noise. The Congressional Research Service note acknowledged that private credit funds hold roughly $500 billion in exposure to software-as-a-service companies as of December 2025, that the current U.S. private credit default rate has reached 5.8%, and that a BlackRock vehicle wrote a loan from par to zero within three months — illustrating valuation opacity in real time. These are now congressional facts. The era of self-description is over. The era of compelled disclosure has begun.

🤝 Top Deals & Developments:

• House Democrats probe seven major private credit firms — The Democratic members of the House Financial Services Committee sent inquiries to Blackstone, Ares, Apollo, KKR, Blue Owl, BlackRock, and Carlyle, targeting fund marketing, valuations, fee structures, leverage, and BDC management practices — the broadest congressional scrutiny the asset class has faced.

• Private credit firms accelerate CLO issuance to raise liquidity — Faced with mounting redemption pressure, the industry has turned to securitisation: CLO issuance reached $9.5 billion in 2026's first quarter, just shy of 2024's record pace, as managers package loans into bonds to generate fresh cash without triggering redemption gates.

• Sona Asset Management eyes Tokyo expansion — London-based credit manager Sona, founded by John Aylward, is opening a Tokyo office and hiring locally to develop credit products for Japanese investors and borrowers — a counter-cyclical bet on Asia as U.S. and European redemption pressures dominate sentiment.

• Colonial First State weighs private credit boost amid Iran war inflation — Australia's A$179 billion ($123B) fund manager CFS told Bloomberg it is evaluating increased private credit allocations, favouring floating-rate instruments as the Iran war pushes energy prices and inflation higher — the institutional channel behaving opposite to the retail one.

• S&P flags tariff second-order risk for middle-market CLOs — S&P Global Ratings concluded that while direct tariff exposure in private credit CLOs is limited — most portfolios are domestically focused services businesses — second-order effects including sustained inflation, weakened consumer spending, and recessionary pressure represent material downside risk for the middle market in 2026.

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