The Federal Reserve banks of Dallas and New York will conduct a pilot survey of the private credit market, which is estimated to total $1.3 trillion, the New York Fed said on Wednesday. The survey is scheduled to begin after the end of the third quarter and aims to collect structured information on an area of finance that has grown significantly since the late 2000s.
Private credit expanded as a source of funding for private equity buyouts in the years after the 2008 financial crisis, when many banks pulled back from leveraged lending. Over time, the sector broadened its role and now provides debt to higher-risk companies while attracting capital from investors seeking income.
Despite its growth, private credit remains relatively small when compared with traditional banking. That scale, however, has not prevented scrutiny: regulators and observers have raised questions about the quality of underwriting standards and the limited transparency that characterizes much of the market.
The upcoming pilot survey will divide the private credit universe into three borrower-size segments based on earnings before interest, taxes, depreciation and amortization - EBITDA. The upper middle market will include firms with EBITDA greater than $100 million, the middle market will cover companies with EBITDA between $30 million and $100 million, and the lower middle market will consist of borrowers with EBITDA under $30 million.
The New York Fed said it plans to compile and publish findings from the pilot in the first quarter of 2027. The timetable indicates the Fed is seeking a multi-quarter window to gather, process and analyze responses before releasing aggregated results.
Regulatory authorities have said they face difficulties in assessing the risks that private credit poses to banks and to the financial system more broadly because of limited data availability and because they generally lack the legal authority to compel disclosure from an industry that operates largely outside the regulatory perimeter.
The pilot survey represents a direct effort by regional Fed banks to close information gaps. The New York Fed did not provide additional operational details about data collection methods or respondent requirements in its announcement.