Picture two funds holding the same loan to the same borrower, on the same terms, on the same day. One carries it at 98 cents on the dollar. The other carries it at 91. Both marks were produced by serious people following written policies. Both will be audited. Both cannot be right — and yet, until very recently, the market had no referee willing to say so out loud.
On September 28, 2026, the SEC's Office of the Chief Accountant and its Division of Investment Management published a joint staff statement on fair value measurement and disclosure for private assets. It was framed as a reminder, not a rule. Chief Accountant Kurt Hohl and Division Director Brian Daly wrote that it created no new obligations. Read it that way and you miss the point. The statement names the exact practices the SEC's examiners will now test: marks that must reflect a market participant's view, models calibrated to real transactions, and disclosures that say plainly when income is not being collected.
The numbers behind the statement explain why it arrived now. Private credit inside registered fund portfolios grew nearly 60 percent in five years, from about $170 billion in December 2020 to roughly $270 billion by the end of 2025. At year-end 2025, 54 percent of interval fund assets and 44 percent of tender offer fund assets were classified as Level 3 under ASC Topic 820 — assets with no observable market inputs, valued on significant unobservable inputs and management judgment. Another 21 percent of interval fund assets and 42 percent of tender offer fund assets sat in private funds valued using the investee fund's NAV as a practical expedient. In other words, the fastest-growing corner of the registered-fund world is the corner where the price is, by definition, an opinion.
The statement's first demand is the one managers will feel most. A fair value measurement must reflect what a market participant would pay, not what the lender hopes to collect. That means looking past borrower-specific information from the direct lending relationship and weighing the broader market: prevailing credit spreads, liquidity conditions, and the compensation a buyer would demand for bearing the risk. A loan to a healthy borrower in a widening market is worth less than the same loan was three months earlier, even if the borrower has not missed a payment. Managers who mark only on borrower news are marking half the risk.
The second demand is calibration. Under ASC 820, a valuation technique that relies on unobservable inputs has to be calibrated so that at initial recognition it produces the transaction price — the entry price is the anchor for every measurement that follows. The staff statement pushes further: periodic reassessment of whether model outputs still line up with market information, including comparable transactions, public market equivalents, secondary market indications, and relevant credit indices. The secondary market gives the staff its sharpest example. Volume grew from approximately $156 billion in 2024 to approximately $220 billion in 2025, and secondaries funds were 15 percent of private equity fundraising in the first three quarters of 2025, nearly double the five-year average. When a fund interest trades at a discount in that market, a manager using the underlying fund's NAV as a practical expedient is expected to consider that signal — and to document the basis for using the expedient at all.
None of this is happening in a vacuum. The market the statement addresses is enormous and still growing. The Alternative Credit Council's Financing the Economy 2026 report, produced with Houlihan Lokey, put global private credit assets under management at $4.1 trillion at the end of 2025, up from $3.5 trillion the year before — the second consecutive year of 17 percent growth. The Federal Reserve's May 2026 Financial Stability Report put the narrower U.S. measure at about $1.4 trillion, roughly 10 percent of the debt of U.S. nonfinancial corporations and about a third of below-investment-grade debt outside bank loans. Morgan Stanley expects the market to reach $5 trillion by 2029. BlackRock, which is building a private credit business of about $220 billion in client assets once its HPS acquisition completes, projects $4.5 trillion by 2030. Every one of those dollars needs a mark.
Here is the counterweight, and it matters. A mark is not a trade, and the people who warn against over-reading the SEC statement have a real argument. Private credit's defenders point out that loans are held to maturity by design, that quarterly marks smooth the panic that daily pricing imports from public markets, and that a forced mark-to-market regime could push managers toward the most liquid, most generic credits — the opposite of what borrowers need. The Alternative Credit Council's own 2026 report makes the growth case in those terms: pressures remain concentrated rather than indicative of broader deterioration, and the market is broader than the headlines suggest. There is truth in that. A loan that pays its coupon every quarter is not a bad loan because a secondary buyer would demand a discount for holding it.
But the counterweight has a limit, and the limit is the investor on the other side of the NAV. When a fund lets new money in at a NAV built on stale marks, the new investor overpays and the old investor is diluted in reverse. When a fund lets money out at an inflated NAV, the investors who stay behind absorb the loss. That is why the statement's third theme — non-accrual and payment-in-kind interest — bites hardest. The staff wants clearer disclosure of when accrual stops, what triggers it, and how uncollected interest is handled, because PIK interest is income that arrives as more debt rather than cash. A fund can report rising income while its borrowers pay in promises. The investor reading the NAV deserves to know which kind of income it is.
The practical consequence is a valuation business that is about to get much bigger. Auditors, under PCAOB standards, are expected to bring skepticism to Level 3 measurements that management has an interest in keeping high. Fund boards need independent opinions they can point to. Managers need benchmarks built from actual transactions — Kroll and StepStone's private credit benchmarks, launched in September 2025 on loan-level data from more than 15,000 deals and now covering more than 18,000, exist precisely because quarterly fund-level marks were no longer enough evidence. The market is building the infrastructure to price what it used to estimate.
What changes next is the rhythm. Valuation in private credit used to be a quarterly ritual performed behind closed doors. It is becoming a continuous, evidenced, externally tested process — and the firms that can do it credibly, with data rather than assertion, will set the standard every other fund is measured against. The number nobody could agree on is about to get a referee. The firms that supply the evidence will be the ones the market trusts.
Sources: SEC, Statement on Fair Value Measurement and Disclosure Considerations for Private Assets (Chief Accountant Kurt Hohl and Brian Daly, September 28, 2026), https://www.sec.gov/newsroom/speeches-statements/hohl-daley-statement-fair-value-measurement-disclosure-considerations-private-assets-092806; Simpson Thacher, “SEC Joint Statement on Valuation of Private Assets” (October 2, 2026), https://www.stblaw.com/about-us/publications/view/2026/10/02/sec-joint-statement-on-valuation-of-private-assets; Baker Donelson, “SEC Staff Puts Private Asset Valuation in the Spotlight,” https://www.bakerdonelson.com/sec-staff-puts-private-asset-valuation-in-the-spotlight; Alternative Credit Council / AIMA, Financing the Economy 2026 (with Houlihan Lokey), https://www.aima.org/compass/insights/private-credit/financing-the-economy-2026.html; Federal Reserve, Financial Stability Report, May 2026, Box 4.1, https://www.federalreserve.gov/publications/2026-may-financial-stability-report-funding-risks.htm; Morgan Stanley, “Private Credit Outlook: Estimated $5 Trillion Market by 2029,” https://www.morganstanley.com/ideas/private-credit-outlook-considerations; PitchBook, “Private credit AUM could hit $4.5 trillion by 2030” (BlackRock forecast, March 2025), https://pitchbook.com/news/articles/private-credit-aum-could-hit-4-5-trillion-by-2030-boosted-by-ai-buildout-blackrock; Kroll StepStone Private Credit Benchmarks, https://www.kroll.com/en/tools-and-platforms/kroll-stepstone-private-credit-benchmarks.