Global Trustee and Fiduciary Services Bite-Sized Issue 6 2026

6 AIFMD CRYPTOASSETS FINTECH FSB IOSCO MIFID II/MIFIR MONEY MARKET FUNDS OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG T+1 ASIA PACIFIC EUROPE LUXEMBOURG NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 6 | 2026 Quick LInks FSB FSBWarns on Private Credit Vulnerabilities On 6May 2026, the Financial Stability Board (FSB) published a report on financial stability vulnerabilities in private credit. The FSB says that this activity has grown rapidly, to an estimated USD1.5-2.0 trillion in assets at end-2024 and is heavily concentrated in a few jurisdictions. Notwithstanding the benefits private credit brings, in the formof tailored finance for companies and diversification for investors, the FSB states that it also embeds several vulnerabilities. The FSB notes that the private credit ecosystem is characterised by deepening interconnections between asset managers, banks, insurers and private equity firms. Banks and private credit funds are connected through financing arrangements and strategic partnerships. Across its members, the FSB says the available data captures direct exposures of around USD220 billion of drawn and undrawn bank credit lines to private credit funds, while some commercial estimates range from USD270-USD500 billion. The FSB says that this range highlights some of the data challenges in private credit. However, there are also potential vulnerabilities from a range of other indirect exposures including through banks providing revolving credit facilities to companies that are simultaneously borrowing from private credit funds and the growing use of synthetic risk transfers. In the report the FSB warns that valuation opacity and reliance on private credit ratings can amplify strains in stress. Private credit borrowers typically lack public ratings, creating transparency challenges for market-wide monitoring. The FSB says that available evidence indicates that borrowers typically have lower credit quality and higher leverage than borrowers observed in comparable public markets. The FSB notes that there are some signs of borrower stress as usage of payment-in-kind arrangements has increased and some increases in default rates, albeit from low levels. The growing use of private ratings, sometimes from lesser-known providers, to facilitate investment by rating- reliant investors (including insurers) also warrants monitoring. Private credit lending is concentrated in a few sectors, notably technology, healthcare, and services, complicating surveillance and increasing the risk that a firm‑ or sector‑specific shock turns into broader market stress. The FSB says that concentration arises from significant exposure to sectors such as technology, healthcare, and services. Leverage is reflected in the presence of opaque, multi-layered structures. Liquidity issues stem from the growing popularity of funds offering redemption options to investors, which may heighten the procyclicality of private credit. The FSB warns that data gaps hinder effective oversight of the sector. Differences in definitions across jurisdictions and limited fund‑ and loan‑level information make it hard to assess exposures and potential transmission channels. The FSB proposes a core set of comparable metrics for authorities to track market size and growth, links with banks and insurers, leverage, liquidity features, concentration, cross‑border activity, and borrower credit quality. The FSB encourages authorities to: • Address data challenges, including those related to the lack of granular fund and loan-level data and the absence of harmonised global definitions. • Deepen analysis of interlinkages of private credit with private equity and insurers and of liquidity mismatches in private credit funds. • Share supervisory approaches on risk management and governance for banks and non-banks active in private credit, including aggregation of exposures, valuation practices, and the use of private ratings. Link to the Report here