In a sharp warning, the Financial Stability Board flagged the private‑credit market’s opacity and debt buildup as potential amplifiers of financial stress. The watchdog cited a $400mn hit to HSBC from a loan to Apollo’s Atlas SP, underscoring the fragility of the sector.

The report estimates the industry at $2tn by year‑end, a figure that remains unverified due to data gaps. Debt levels now sit at 5‑6 times EBITDA, possibly higher once earnings adjustments are excluded, putting borrowers on a precarious footing.

Retail participation has surged from negligible to about 13 % of assets under management, raising liquidity concerns. Investors may not fully grasp the illiquidity of these funds, potentially triggering mass redemptions in a crisis.

With banks’ direct exposure under 0.5 % of assets, the FSB stresses that interconnectedness can still create hidden risks. Regulators will probe liquidity mismatches and the broader network of banks, asset managers, insurers, and private equity linked to private credit.