The Australian Securities and Investments Commission (ASIC) has signaled it will closely monitor how private credit funds value their portfolios at the end of the financial year on June 30.
The regulator expects fund managers to adjust their book values to reflect a deteriorating economic reality, moving away from optimistic assumptions that may no longer hold.
This directive comes as the private credit sector faces mounting pressure to justify its valuations amid rising default risks and tighter liquidity conditions.
Fund managers are now tasked with interpreting how much of a write-down is necessary to satisfy regulatory standards, a process that remains open to significant interpretation but carries the weight of ASIC's oversight.
The scrutiny in Australia mirrors a broader global trend of regulatory tightening in the alternative asset space.
The US Securities and Exchange Commission has previously issued warnings regarding transparency issues in private credit, specifically targeting what it termed "disclosure bloat" and lack of clarity in fund reporting.