Private Credit Has a Data Problem Before It Has a Liquidity Problem

Private credit did not become a major asset class because its loans were easy to trade. Quite the opposite. A direct lender could negotiate a bespoke loan, hold it inside a long-duration fund, monitor the borrower privately and avoid much of the daily price discovery that comes with public markets. The information model was built around a relationship between lender and borrower, not around the assumption that another investor might need to understand the loan next week. That model works well until somebody wants liquidity. In 2026, several parts of the private-credit market are being forced to think more seriously about that moment.

The Federal Reserve estimates that U.S. private credit had grown to roughly $1.4 trillion by the end of 2025. It has become an important source of finance for below-investment-grade middle-market companies, particularly those that do not have easy access to broadly syndicated leveraged loans. Federal Reserve: Private Credit and Leveraged Loan Markets The same market is now dealing with a less comfortable combination of events: weaker sentiment, more credit stress, redemption requests in semi-liquid vehicles and growing demand for secondary-market solutions.

Reuters reported on 21 August that growth in U.S. bank lending to non-depository financial institutions had slowed sharply, adding another layer of uncertainty to a part of the financial system that increasingly supports corporate lending. Reuters Breakingviews: Shadow banks enter a newly uncertain era This does not mean private credit is facing a general liquidity crisis. It does mean that an asset class built largely around hold-to-maturity relationships is developing a much more active question:

If this loan has to move, can the next investor understand exactly what they are buying?

That is partly a pricing problem. Before pricing, it is a data problem. The specialist records and lifecycle models below describe review requirements and illustrations. They should not be read as claims that software has verified the rights or that every proposed field and relationship is an existing DaDepo feature.

Liquidity exposes differences within private credit

“Private credit” now covers a wide range of strategies. A senior direct loan to a sponsor-backed software company is not the same risk as an asset-backed facility secured by receivables. A real-estate bridge loan is not the same as infrastructure debt. An investment-grade private placement is not the same as opportunistic rescue financing. Recent headlines have been concentrated in parts of direct lending rather than uniformly across the asset class.

The Financial Times reported in August that non-accrual loans among large listed business development companies had risen materially, with particular stress in loans originated during the cheap-money period around 2020 and 2021. Software has been a visible source of pressure. Other segments, including some asset-backed strategies, have held up better. Financial Times: Private credit under strain as troubled loans swell

The Federal Reserve has made a similar distinction. Its May 2026 Financial Stability Report said deteriorating sentiment, corporate defaults and concern about asset quality had led to increased redemption requests in some semi-liquid private-credit vehicles. At the time, managers generally contained those requests within existing redemption limits and the market continued to function. Federal Reserve: Funding Risks That nuance matters. The useful question is not whether “private credit is good” or “private credit is bad”. It is whether the information available for a specific loan or portfolio is good enough for the decision that now has to be made. A private loan can be perfectly manageable while the original lender owns it.

The lender may know the borrower well. The deal team remembers why a covenant was amended. The portfolio manager knows that an EBITDA adjustment came from a specific acquisition. Someone in operations knows which version of the credit agreement is current. The sponsor relationship fills in gaps that are not obvious in the data room. Much of that context can remain implicit. A secondary buyer does not have it. When a loan or portfolio is offered to another investor, previously tolerable information shortcuts become visible very quickly. Which financial model is current? Which amendment governs the leverage covenant? Was the latest interest payment made in cash or partly capitalised?

What exactly is included in adjusted EBITDA? Which collateral documents were actually perfected? Was the borrower’s acquisition completed? Did the lender waive a covenant breach or permanently reset the covenant? Was a valuation mark changed because the business deteriorated, because market spreads moved, or because the valuation methodology changed? Is the loan still performing? If there are several tranches, which one is for sale? If a continuation vehicle is being formed, which economic rights move with the asset? These questions are not exotic. They are what appears when a relationship asset becomes a transferable asset. The difference is that the second investor cannot rely on institutional memory.

The private-credit secondary market is growing quickly enough that this information problem is becoming structural. Reuters reported that Evercore estimated $20.4 billion of private-credit secondary transactions in the first half of 2026, more than double the volume from the same period a year earlier and already above the total for all of 2025. GP-led transactions accounted for most of the activity. Reuters: Private credit roundup, 31 July 2026 LGT Capital Partners independently described private-credit secondary volume at roughly $20 billion for the same period and linked the expansion to a mix of maturing funds, redemption pressure and broader adoption of secondary solutions. LGT Capital Partners: H1 2026 secondary transaction volume

This is still a small turnover rate relative to the size of private credit. That is exactly why it is interesting. A market does not need every loan to trade frequently before transferability begins to influence how assets are documented. Once there is a credible possibility of a secondary transaction, the lender has a reason to maintain the loan in a form that another institution can inspect without reconstructing the entire history.

Preserve loan history, valuation context and performance changes

Private-credit transactions already use structured portfolio data. That is not the missing piece. A portfolio tape can show: borrower, sector, original commitment, funded amount, interest rate, maturity, leverage, LTV where relevant, internal rating, fair value, payment status, and selected covenant information. For initial screening, that is useful. The difficulty begins when a buyer asks where a number came from. Consider four fields:

Every one of them can be technically correct and still require explanation. The EBITDA figure may include adjustments permitted by the credit agreement, adjustments used only by management, or adjustments accepted internally by the lender. The leverage ratio depends on which debt and cash definitions are used. The fair-value mark may be model-based because there is no observable transaction price. “Performing” may coexist with an amendment, a covenant reset, payment-in-kind interest or a sponsor equity injection. A secondary investor therefore needs something between the spreadsheet and the raw data room. Not another summary. A traceable record. For a private-credit asset, the original credit agreement is only the beginning.

A loan that has existed for five years may have accumulated: amendments, waivers, consent letters, incremental facilities, acquisition financing, covenant resets, maturity extensions, changes in benchmark rate, hedging arrangements, borrower financial statements, compliance certificates, collateral updates, valuation reports, board materials, sponsor correspondence, restructuring proposals, and servicing or payment events. The sequence matters. A buyer needs to know not merely that an amendment exists, but whether it is current and what it changed. A covenant field without the amendment history behind it can be dangerous. A maturity date without the extension document can be misleading. A collateral value without a valuation date is incomplete. The practical unit of due diligence is therefore not the PDF.

It is the current right plus the chain of evidence that explains how it became current. That is very close to the problem DaDepo’s Asset Passport is intended to solve. Public credit has observable market prices, even when those prices are volatile. Private credit often does not. Many loans are valued using models, comparable instruments, manager judgement and third-party valuation processes. Different funds may hold similar or even identical exposures at different marks.

In August, Reuters reported that Ares reduced the planned size of a European private-credit vehicle following investor pushback over loan valuations. The same report described weaker results across several private-credit vehicles even as redemption pressure showed signs of easing at others. Reuters: Private credit roundup, 7 August 2026 A secondary transaction introduces a different kind of information. It creates an actual price at which somebody is willing to take risk. That does not make the price objectively correct. It does make provenance around valuation more important. A useful asset record should distinguish par or face amount, outstanding principal, accrued interest, lender carrying value, external valuation, internal fair-value mark, secondary bid, transaction price, and recovery estimate.

Those numbers should not be collapsed into one field called Value. The same loan can legitimately have all of them at once. Private-credit stress does not always arrive as a missed payment. The borrower may still be current while the economics of the loan have changed materially. Signals can include amendment requests, covenant headroom shrinking, sponsor support, delayed financial reporting, repeated add-backs, falling recurring revenue, customer concentration, liquidity pressure, PIK elections, debt exchanges, new super-senior financing, asset sales, lender concessions, or management changes. A portfolio may therefore contain loans that are technically performing but no longer resemble the risk originally underwritten. For a secondary buyer, the binary field is not enough.

The buyer needs the path. What changed? When? Why? Who agreed to it? Which document governs the new position? What remains unresolved? A well-maintained loan record should make that answer available without forcing the next reviewer to read every document chronologically.

Retail liquidity and borrower alternatives create different pressures

Historically, much private-credit capital sat in closed-end funds with long lockups. That matched the underlying loans reasonably well. The Federal Reserve notes that the market has increasingly attracted individual investors through perpetual-life BDCs and interval funds that provide limited redemption mechanisms. By late 2025, semi-liquid private-credit vehicles represented roughly $241 billion of net assets in the Fed’s dataset. In the first quarter of 2026, redemption requests rose sharply at a number of those vehicles. Many managers capped redemptions at around 5% of NAV under their existing terms. Federal Reserve: Financial Stability Report, May 2026 Again, this is not evidence that the structures failed.

It is evidence that the asset side and the investor-liquidity side can move on different clocks. If redemptions have to be met partly through asset sales, financing or secondary transactions, loan documentation that was designed only for long-term internal monitoring suddenly has another job. It has to support liquidity. One reason this matters beyond private funds is that private credit has become economically important to companies that have limited alternatives. The Federal Reserve’s August 2026 analysis compares private credit with the leveraged-loan market and finds that larger middle-market borrowers are more able to switch between the two when financing conditions diverge. Smaller borrowers are less able to substitute.

If private-credit conditions tighten materially, those companies may not have a public or broadly syndicated market waiting for them. That creates a useful distinction between fund liquidity and borrower liquidity. A fund may want to sell an asset. A borrower may simultaneously need refinancing. The quality of the loan record matters to both. A potential buyer needs enough information to underwrite the existing exposure. A refinancing lender needs enough information to understand the borrower, collateral, covenants and capital structure. The same evidence package may support very different transactions.

A portfolio needs explanations and asset-level provenance

For DaDepo, the useful product question is not whether private credit needs another data room. Private credit already has data rooms. The more interesting question is what should sit between the data room and the transaction. For a debt portfolio, an Asset Passport could maintain a structured record for each exposure while preserving the relationship to the underlying evidence. For example:

Core exposure

Borrower, facility, lender or current holder, original commitment, funded amount, outstanding principal, currency, coupon and benchmark, maturity, seniority, current payment status, and relevant as-of dates.

Capital structure

Total debt, relevant tranches, super-senior or revolving facilities, sponsor equity, intercreditor arrangements, guarantees, and material structural subordination.

Covenants

Covenant definition, test frequency, threshold, latest result, headroom, amendment history, waiver history, and source certificate.

Borrower performance

Latest financial period, revenue, EBITDA, cash, leverage, recurring revenue where relevant, management adjustments, lender adjustments, reporting status, and source financial statements.

Collateral and security

Collateral type, security documents, perfection or registration evidence, guarantors, valuation date, valuation source, material exclusions, and known competing interests.

Lifecycle events

Amendment, consent, acquisition, additional borrowing, maturity extension, PIK election, covenant breach, restructuring, non-accrual, recovery action, sale process, and servicing transfer.

Valuation

Par, carrying value, internal mark, external valuation, valuation date, valuation methodology, secondary bid, transaction price where applicable, and source or reviewer.

Provenance

Source document for material fields, document version, user-entered information, extracted information, review status, last update, and unresolved conflicts. The objective is not to force every private loan into one schema. It is to make the important differences explicit. Most portfolio databases are good at storing what. What is the interest rate? What is the maturity? What is the leverage? What is the mark? The difficult information is often why. Why was the covenant reset? Why did the lender accept PIK? Why did the valuation move? Why is adjusted EBITDA different from reported EBITDA? Why did the borrower receive an extension? Why is the loan still classified as performing despite a major restructuring?

Why is one collateral asset excluded from the borrowing base? That information tends to sit in investment-committee papers, emails, servicing notes or in the memories of the deal team. It is hard to standardise completely. It should not be lost. A useful Asset Passport does not need to turn every judgement into a database field. It can preserve a concise reviewed explanation and link it to the relevant evidence. That is more useful than pretending the portfolio is entirely quantitative. In a stable hold-to-maturity portfolio, better provenance is mostly an operational advantage. In a secondary market, it can become a commercial advantage.

A buyer faced with two similar portfolios may reasonably prefer the one where: current documents are identified; amendments are reconciled; covenant history is visible; valuations are dated and sourced; borrower reporting is current; exceptions are disclosed; collateral evidence is connected; servicing events are structured; and data fields can be traced back to evidence. That does not guarantee a higher price. It can reduce uncertainty. In private markets, uncertainty often becomes a discount. The connection between data quality and liquidity is therefore not abstract. The easier an asset is to understand, the easier it is for another institution to decide whether it wants to own it.

AI support and the bounded DaDepo contribution

AI-assisted preparation

The analytical uses discussed here are possibilities for document review, subject to source access and human judgement. They are not a claim that DaDepo currently performs every proposed check or reaches the resulting legal or financial conclusions. A private-credit data room can contain thousands of pages for a single borrower. There is an obvious role for AI in preparing that material. It can help identify: agreements and amendments, covenant definitions, maturity dates, interest terms, guarantors, collateral references, reporting periods, financial values, compliance certificates, waiver language, PIK provisions, transfer restrictions, and inconsistencies across versions.

It can also flag simple but expensive problems: two different maturity dates; an amendment missing from the folder; financials that are older than the portfolio tape; a covenant value that does not match the latest certificate; a collateral reference that appears only in an earlier agreement; a valuation with no visible as-of date; or a borrower marked as current while a later document describes a restructuring. That is valuable work. It is not underwriting.

The AI should not decide: whether EBITDA adjustments are reasonable; whether a borrower is creditworthy; whether a valuation is fair; whether a covenant waiver was commercially sensible; whether a loan should be marked down; whether a secondary bid is attractive; whether the investor should sell; or whether a restructuring will recover value. Those are investment and credit decisions. The system can make the evidence behind them easier to inspect.

DaDepo can help prepare a private document-backed asset draft and retain source-linked information for human review. The private Parties and contractual roles table can record source-described party, contract and role rows with document and clause references, optional source dates, and pending, confirmed or rejected review decisions. The same party can appear in different contracts and roles. Where current compatible completed analysis is available, AI may suggest pending role rows; a user reviews and confirms or rejects them. These records do not establish legal title, priority, enforceability, the validity of a reported exposure or the outcome of a dispute.

The specialist information model for private-credit portfolios is a proposed information requirement. A complete relationship graph, automatic exposure reconciliation and automatic cross-contract decisions are not delivered capabilities established by this article. DaDepo does not need to become a private-credit fund, valuation agent or trading venue to be useful in this market. Its relevant role is earlier. A debt portfolio can arrive as a combination of portfolio tape, borrower folders, legal documents, financial reports, collateral evidence, valuations, servicing events, and internal explanations. A proposed specialist workflow could help turn that package into structured Asset Passports with source links, version history, review status and controlled access.

The proposed structure could support several moments in the lifecycle: portfolio monitoring, internal review, refinancing preparation, lender-to-lender transfer, continuation-vehicle diligence, secondary sale preparation, credit-fund portfolio review, servicing handover, and investor due diligence. The Asset Passport does not make the loan liquid. The proposed model aims to make the information needed for a liquidity decision more portable. This remains an information-preparation objective, subject to the specific workflow actually implemented.

Creating or reviewing a private-credit Asset Passport does not mean that DaDepo has underwritten the borrower; verified the accuracy of borrower financial statements; approved EBITDA adjustments; determined covenant compliance; valued the loan or collateral; determined fair value or NAV; classified an exposure as performing, non-performing or impaired for accounting or regulatory purposes; confirmed perfection or priority of security; provided a credit rating; recommended a secondary sale or purchase; determined whether a transaction is suitable for an investor; operated a private-credit secondary market; completed an assignment or transfer; provided custody or settlement; guaranteed liquidity, recovery or price; or provided legal, investment or credit advice.

Important: DaDepo provides technology and information tools. It does not provide legal, financial, investment, tax, accounting, regulatory, valuation, credit-rating, underwriting, custody or settlement advice or services unless a specific service is expressly identified and lawfully provided. Investors and lenders should review the underlying evidence and perform their own credit, legal and investment analysis.

Questions for a secondary-readiness review

Before a private-credit loan or portfolio is shown to another investor, ask:

1. Identity: Is every borrower and facility unambiguously identified?
2. Current terms: Is the current credit agreement version clear?
3. Amendments: Are all amendments, waivers and consents included and ordered?
4. Balance: Is the current outstanding amount dated and reconciled?
5. Interest: Are cash-pay, PIK and other interest components distinguished?
6. Maturity: Does the portfolio tape match the current legal documents?
7. Covenants: Are current definitions, thresholds, tests and waivers traceable?
8. Financials: Are the latest borrower financials and compliance certificates present?
9. Adjustments: Is the basis for material EBITDA or leverage adjustments understandable?
10. Collateral: Are security, guarantees, valuation and perfection evidence current?
11. Capital structure: Are relevant senior, junior and super-senior claims visible?
12. Performance: Are payment status, amendments and restructuring events current?
13. Valuation: Can each material mark be tied to a date, source and methodology?
14. Exceptions: Are known problems disclosed rather than buried in the data room?
15. Transferability: Do the documents contain assignment, consent or lender-eligibility restrictions?
16. Servicing: Is the operational history sufficient for another holder or servicer?
17. Provenance: Can key structured fields be traced to source evidence?
18. Review: Is it clear which information is extracted, user-entered or reviewed?
19. Data age: Which information has become stale since the last portfolio review?
20. Purpose: Is the package ready for this transaction, rather than merely complete enough for internal monitoring?

The checklist does not determine whether the asset should be sold. It determines whether another investor can begin the real work without first rebuilding the record.

Transferability requires information continuity

The most interesting development in 2026 is not that private credit is turning into a public market. It is not. The loans remain negotiated. Information remains controlled. Borrowers often value lender stability. Many assets will still be held to maturity. But the infrastructure around the asset class is changing. Semi-liquid funds introduce redemption mechanics. Continuation vehicles create new ownership structures. Credit secondaries create price discovery. Banks and private-credit funds are increasingly interconnected. Lenders are managing more stressed credits. Investors are asking harder questions about marks and underlying asset quality. Each development makes the same operational weakness more expensive: important loan information that exists, but cannot travel cleanly with the loan.

Private credit can remain private and still become more portable. That portability requires more than a data room. It requires a maintained record of what the lender owns, which terms govern it, what changed, what the latest numbers mean and which evidence supports them. The liquidity problem gets the headlines. The data problem arrives first.

Further reading

• Reuters Breakingviews: Shadow banks enter a newly uncertain era
• Federal Reserve: Private Credit and Leveraged Loan Markets—Similarities, Differences, and Substitution
• Federal Reserve: Financial Stability Report—Developments in Private Credit
• Reuters: Private credit roundup—earnings hold up as defaults and redemptions remain elevated
• Reuters: Private credit roundup—weaker results but redemption pressures ease
• LGT Capital Partners: H1 2026 secondaries activity