Transparency in Private Markets: Who Needs It, When, and Why?

Toward the end of 2025 and continuing into early 2026, media coverage of negative news in private credit has spiked. Much of the attention has centered on names like Tricolor and First Brands. While their stories made great headlines, they also exposed important nuances within private credit. In reality, neither of those loans was originated as private. They were bank-originated syndicated loans underwritten in the traditional corporate credit model. They became “private” when banks sold them off to various investors.

While there are hidden risks in private credit, I believe the risks are currently low. Default rates remain low, especially compared to credit cards, bank loans, or other instruments. Proskauer’s Private Credit Default Index, which tracks senior-secured and unitranche loans in the United States, showed an average default rate of 2% for the first three quarters of 2025 (the date of their last report).ⁱ

The potential risks have drawn at least some regulatory attention. The SEC named private credit as a 2026 examination priority.ⁱⁱ Meanwhile, private credit investors focus on the fundamentals: transparency, liquidity, and plain-old risk.

For both GPs and LPs, those factors raise the questions that matter. Who needs transparency, when, and why? And is that transparency coupled with regulatory submissions such as Form PF? The answers need as much nuance as the sector itself, for five core reasons.

Reason 1 — private markets run on information asymmetry

Private markets are built on information asymmetry. There’s always going to be a delay between private positions and public activity because that’s the secret sauce. Not being able to see everything in real time is part of what creates an edge. It’s part of why managers can charge the fees they do and aim to deliver better risk-adjusted returns.

At the same time, most LPs are qualified institutional investors. They typically have experience running investment and operational due diligence through mechanisms like NDAs, data rooms, reconciliations, custodians, and where the assets sit. If they don’t get the information they need or depend on regulatory disclosures to do that diligence, something is off. There should be other ways they know how to cut through the asymmetry and place better bets.

Reason 2 — what’s Form PF got to do with it?

Form PF is a regulatory disclosure to the SEC. It is only loosely related to the investor. Hedge funds and private market firms are private managers taking in private capital. That means they are not public vehicles where timely disclosure is the operating standard.

When people bring up Form PF in the context of “delayed disclosure,” this issue often gets tangled up with what they think “real transparency” is. Public market firms can operate closer to real time because of the transparency that drives those markets and the prevalence of straight-through-processing. Private funds don’t work that way. There’s always going to be some delay because they operate in longer cycles.

However, we should acknowledge that Form PF has issues. Delays can stretch from three to six months, with some proposals that could push it even further as the SEC and CFTC re-examine and amend requirements, and with implementation delayed until October 2026.ⁱⁱⁱ This combination of factors makes Form PF an unlikely candidate for overseeing or controlling private credit’s increasing systemic importance.

Reason 3 — real investor transparency is negotiated and operational

Real investor transparency in private markets is a negotiation between GPs, LPs, borrowers, sponsors, additional originators, and stakeholders such as law firms and servicers. Typically, the larger the investor, the more leverage they have to negotiate the tension around how much transparency they get into the making of the secret sauce.

The difference is apparent when large allocators become a meaningful percentage of the firm. These can include large managers that trade but do not originate loans, as well as pensions, insurers, and sovereign wealth funds. Such allocators also have the infrastructure to handle high volumes of deal data, including real-time monitoring and pass-through. By their nature, these large allocators often bring in another layer of transparency demands, such as their use of consultants and outsourced chief investment officers (OCIOs) to impose specific requirements. Pensions and endowments have boards and oversight that will set allocation limits across asset classes.

Although not every LP gets that level of inside look, they still have operating processes and platforms that define how cash and breaks are reconciled, workflows and data exchanged with custodians, and what they receive from loan servicers. These details become the operational basics of having the right personnel, the right policies, the right workflows, and the proper data management.

Reason 4 — stress, defaults, and contagion aren’t behaving like in 2008

Default rates now under 2% are quite comparable with other credit products like high-yield bonds and leveraged loans, per JPMorgan’s Guide to Alternatives.^iv JPMorgan also found yield spreads versus leveraged loans at 213 bps and 545 bps versus SOFR, demonstrating attractiveness alongside this low level of risk.

However, risk signals from payment-in-kind or PIK (non-cash income, accrued in lieu of cash interest payments) and other types of workout, amend-and-extend arrangements, or other adjustments. No one wants to see an outright default. This activity resembles restructuring without calling it a restructuring event. JPMorgan sees PIK income at historically high levels, approaching 8%.

The contagion dynamic is also quite different from 2008’s mortgage crisis. Private credit is deal by deal. If one private market participant goes down, it doesn’t automatically spread through a sector the way real estate prices do. In some club deals, secondary market instruments like CLOs, business development companies set up for private lending, or club lenders might feel the sting. Still, it’s not automatically a concentrated risk that takes down a platform.

Reason 5 — for HNW and retirement capital, structure and plumbing matter more than more data

The new dilemma is what happens as private markets go after high-net-worth and retirement capital to raise more capital. Many institutional investors are tapped out and have already filled their private credit allocations. That investor base is different from the institutional world and will likely change the dynamics around disclosed transparency versus operational savvy.

Investors who can write $250,000 to $500,000 checks from their 401(k) rollovers and IRAs are coming to believe they need exposure to private markets. This shift introduces liquidity mismatches, such as private funds buying assets they can’t readily sell, alongside evergreen structures that offer quarterly, semi-annual, or annual redemptions. These investor needs will raise the bar for transparency to get clarity for these investors and their advisors to make confident decisions.

Takeaway — so, who needs transparency, when, and why?

Transparency is not a cure-all. The need varies across the industry.

Regulators need transparency into systemic risk: who’s concentrated, who’s leveraged, and where stress might spill over if conditions worsen. That’s the narrow job of Form PF and related reporting. It is regulator-facing, backward-looking by design, and only loosely connected to how individual LPs should underwrite private credit.

Investors need a different kind of transparency, on a different cadence. For institutional LPs, “real” transparency comes through diligence and plumbing: NDAs, data rooms, reconciliations, custody, servicing, and the operating reality underneath the portfolio. They need it most at three moments: when they allocate to a manager, as positions move from healthy to pre-distress, and when they must decide whether to redeem, roll, or re-up.