Happy Saturday!
🙏 First, a favor: scroll all the way to the bottom and read the last section. The SEC has a 60-day comment window open on expanding access to private markets, and I’d like us to use it. I can confidently tell you that if we don’t ask for it, nobody else will.
I’ll be filing a comment letter on disclosure (what any fund sold to retail investors should have to tell you before you wire money) and I want to have a good solid list crowdsourced from all 17,680 of you.
So read it, reply with what you’d add, and I’ll compile everything and share the letter before the window closes.
(Don’t make me haunt your dreams with this, go do it now).
Now, on to the part you won’t like: Fitch’s most recent private credit default rate:
Nearly half of what Fitch calls a default is a borrower that stopped paying cash interest (and switched to PIK, cause we all love not paying in cash, amirite?)
In this issue:
1️⃣ Private Credit: redemption pressure is becoming K-shaped, while AI becomes the credit market's biggest borrower.
2️⃣ Private Equity: Partners Group considers splitting its evergreen fund into good assets and old assets.
3️⃣ Commercial Real Estate: 2021 bridge loans meet a higher-for-longer rate path, and an AAA tranche gets hosed.
4️⃣ Regulatory: hide your children. "Responsible retailization" is upon us.
Accredited Insight delivers the LP’s perspective on private credit, private equity, and CRE, drawing on hundreds of deals reviewed, and thousands of conversations. Paid subscribers gain access to our database of over 40 case studies and articles on everything from evergreen funds to due diligence (the kind of analysis that tells you what the GP pitch deck left out).
1️⃣ Private Credit
Is three quarters of data enough to call it?
Across the nine largest non-traded private credit BDCs, only two show requests below 5% in Q3:
One important caveat: those headline percentages overstate new exit demand. When a fund prorates redemptions, the same investor can keep submitting requests quarter after quarter.
So the queue becomes self-sustaining: a capped fund with persistent outflows creates its own next-quarter redemption requests. The line doesn't really disappear until requests fall below the cap.
➡️ Which makes Oaktree's and Goldman's funds interesting outliers (the upper part of the K-shaped evergreen PC recovery). Is the difference better communication around liquidity? A different investor base? Something else? Meaningfully better portfolios? (I'm asking, the comment section is yours).
The AI buildout is now the credit market's biggest borrower
Apollo's latest deck has an interesting numAber: hyperscalers have issued nearly $250 billion of investment-grade debt in 2026 so far, more than the cumulative total of the prior decade.
AI-related issuers accounted for 54% of net IG issuance through August, up from 34% last year and effectively zero in 2024.
2️⃣ Private Equity
Partners Group is considering splitting its capped evergreen fund into good assets and old assets, according to the FT.
Global Value SICAV has been capping redemptions since June, when requests hit roughly 9.8% of NAV.
The proposed solution, subject to shareholder approval: turn the €6.6 billion vehicle into an umbrella with two portfolios:
A “distributing” fund holding the older, weaker-performing assets and meeting redemptions by selling them.
A “compounding” fund holding newer investments and targeting higher returns.
Existing investors would start at roughly 75% distributing, 25% compounding. The 5% cap is expected to apply to both. New money goes only into the compounding side.
The logic is straightforward: don't force a mature fund to sell its most liquid, best-performing holdings to satisfy redemptions and leave everyone else holding the leftovers (what I call “the bagholder problem”).
It creates a clean vehicle for new subscriptions while preserving the existing redemption queue.
➡️ This is worth watching, IMO. It’s an interesting solution to a common problem for mature evergreen PE vehicles.
Here are two case studies (both different funds from the one discussed above):
3️⃣ Commercial Real Estate
On September 16, the FOMC raised the funds rate 25 bps to 3.75–4.00%, the first hike since July 2023. Core PCE has remained above 3% throughout the year, and the median dot still showed one more increase before December. Every floating-rate borrower waiting for relief got a little less relieved.
👉The 2021 bridge loans are doing exactly what 2021 bridge loans were expected to do (and regular readers will find none of this surprising, see the date on this article):
Rate caps are expiring into a hiking cycle, and in-place income isn't close to the underwriting. The WSJ reports that Ashcroft Capital's five-property Georgia and Texas portfolio averaged Q1 rents of $1,423 against the $1,953 the lender projected. Income covers 57% of the payment.
And then another SASB AAA tranche gets in trouble:
From Bloomberg: Centre Square, the twin towers at 1500 Market Street in Philadelphia, was appraised at $471 million in 2019. Last month, a judge approved its sale for $70 million. (That’s an 85% decline, for those of you who are not good with doing math this early in the morning).
The $368 million CMBS deal behind it was a single-asset, single-borrower transaction that closed weeks before Covid, when the complex was 93% leased. By the end of June, occupancy was 28%. The borrower couldn’t refinance at the 2022 maturity.
The formerly AAA class is expected to recover roughly 44 cents, while seven junior tranches are wiped out. PIMCO, the largest holder, is looking at a loss north of $35 million.
This is the third AAA hit since the financial crisis, after 1740 Broadway and the Palisades Center mall. All three were SASBs.
4️⃣ Regulatory Updates
Meanwhile, the SEC proposes to widen the door.
On September 30, the Commission voted out a package it calls “responsible retailization” (formerly known as “democratization”).
The proposal would allow advisers to charge performance fees to registered funds, capped at 20%. It would also modernize the interval fund framework so repurchases can better match a portfolio’s liquidity profile, and create a rules-based path for multi-class closed-end funds.
➡️ Separately, the SEC is taking comments on new routes to accredited status: a FINRA-built exam, plus the CPA, CFA, CFP and Series 79/86/87.
The proposed exam would run roughly 75 multiple-choice questions over two hours, cost about $100, be open to anyone 18 or older, and stay valid for ten years. The largest section (20–28% of the questions) covers investment risk, explicitly including redemption restrictions and the impact of fees on net returns.
I’ll spare you the full extent of my skepticism here, - and I say that as someone who put the word Accredited in the title of a newsletter. Widening the pool is good for business, where I’m concerned.
On that note: unlike the funds, I don't check your investor status at the door. Subscribe whether or not you're accredited.
What I’ll say instead is what’s missing. If the SEC wants more retail money in private funds, the package should come with expanded disclosure requirements for any fund sold to them.
‼️ Let's crowdsource the comment file. What would you add? ‼️
Standardized disclosure should include:
standardized fee presentation (including underlying funds)
valuation methodology, in writing (including underlying funds) - a girl can dream
quarterly fund financials (I’m talking to you, Regulation D vehicles)
redemption history: requests submitted versus requests filled, by quarter, going back at least three years
all-in leverage, including fund-level credit facilities and subscription lines, with their effect on reported IRR
full structural map — every SPV, holdco and feeder in the chain, what sits in each, and what each is obligated to; all off-balance-sheet commitments (guarantees, capital calls, backstops, unfunded obligations); and any securitization of fund assets, stated plainly, including what was transferred, what was retained, and whether the fund holds residual risk. (Pretty please? With a bow on top?🎀)
realized versus unrealized returns, separately stated
related-party and affiliate transactions, including any fees paid to the sponsor outside the management fee
the GP’s own commitment, in dollars, and whether it was funded in cash or waived fees
for credit funds: the share of income accrued as PIK rather than received in cash
What am I missing? Reply or leave a comment. I’ll compile the list and share it before the comment window closes.
-Leyla
P.S. I care. Do you?
The retailization train is coming regardless of what you and I think. I started this newsletter because I found the information asymmetry abhorrent. This is our shot to make the playing field flatter and less opaque. Let's use it.
P.P.S. New here?
Here’s where you’ll find the full archive (somewhat organized):
The item I’d add is simple. Make them show, every quarter, how many people asked for their money back and how many actually got it, including the people who were already waiting from the prior quarter. Right now a fund can say redemptions were 5% and leave out the line that never clears because the same requests get rolled forward. That number is the difference between “you can get out” and “you can ask.” If these products are about to be sold to regular people, that should be on the first page, not buried in a footnote.
Excellent roundup Leyla, especially on private markets stuff and AI credit!