United States: Mark My Words: SEC Staff Guidance on Private Credit Valuation
By Thoreau A. Bartmann, Sasha Burstein, Lance C. Dial, Pablo J. Man, and George Zornada
On 26 September 2026, the Chief Accountant and the Director of the Division of Investment Management a joint statement on fair valuation of private assets (the “Statement”). On its face, it doesn’t break much ground, as it mostly restates existing guidance. However, the most important thing about this statement may be that it was issued at all. With this statement, the underlying message is clear: the SEC staff is looking for robust valuation policies and procedures coupled with material disclosures.
As noted in the Statement, private credit held by registered funds has grown nearly 60% since 2020. Despite this growth, private credit has been under redemption and valuation pressure lately. In fact, senior SEC staff officials and even Chair Atkins have repeatedly noted that the SEC is monitoring the situation. This statement seems to be the response.
Three takeaways stand out for funds investing in private credit.
Marks Must Reflect the Market
Missing borrower information does not excuse the obligation to estimate fair value. A lender’s view must account for what a market participant would consider, including current credit spreads and liquidity. Models should be calibrated to the purchase price and periodically tested against comparable trades, secondary market indications, and credit indices.
Review Reported Income and Disclosures
The Statement suggested greater scrutiny of payment-in-kind interest and non-accrual disclosures. The Statement also reminded registrants of the limitations on using boilerplate valuation disclosure.
NAV Is an “Expedient,” Not a Safe Harbor
Funds holding private fund interests often rely on NAV reported by the underlying manager as a “practical expedient” permitted under US GAAP. But the practice is optional and subject to conditions. The staff’s message is that funds should consider all reasonably available information, including relevant secondary-market data, when using NAV as a practical expedient and document the basis for using it.
Private and registered fund advisers that invest in these asset classes should review this Statement in light of their valuation practices, policies and procedures. In particular, this should prompt a review of their process for reviewing the viability of using NAV information and their scrutiny of reported income. The existence of this Statement suggests that adviser examinations on these issues may be on the horizon.