AIMA CEO key takeaways from IMF-IOSCO spring conference

Published: 23 April 2024

AIMA CEO Jack Inglis recently spoke at the IMF-IOSCO spring conference, offering a valuable counter argument to many commonly cited assumptions about systemic vulnerabilities in private credit funds.

Key takeaways from Jack’s remarks:

1. The private credit funds industry is economically significant but not systemically important. 

2. While private credit is growing, the US$2tn funds market is still a tiny fraction of the US$235 trillion total global debt outstanding.

3. Leverage used by these funds remains negligible, is a fraction of that used by banks, and defaults would need to rise to never seen before levels for bank providers of that leverage to be harmed.

4. Default rates within private credit funds have historically been half that seen in the broader syndicated loan market due to quality lending and risk management standards. 

5. Private credit assets primarily sit within closed end funds thus preventing any instability from being caused by a rush for the exits.

6. Private credit continues to provide a vital source of finance and liquidity to the corporate sector as well as an important and enhanced income stream to fund investors such as pension funds.

7. Regulators concerns appear to be due to a perceived lack of quality data on the industry and this needs to be addressed at a shared global level.

8. Private credit fund advisors and their lending activity is already regulated - extensively so in the US and in Europe.

AIMA’s private credit affiliate the Alternative Credit Council's Financing the Economy research series provides further detail and context on all of these points.