17th September 2025

Can private debt cause systemic risk?

Private debt has emerged from a niche investment strategy into a significant pillar of global finance. As banks have retreated from certain lending activities, particularly in the wake of post-2008 regulatory reforms, private lenders have since expanded to a scale that now rivals both conventional banks and public bond markets. As institutional investors increasingly allocate capital to this asset class, questions have arisen about its potential to cause systemic risk, as highlighted by the IMF in its 2024 “Global Financial Stability Report” and reiterated during its 24th Annual Conference on June 13th, 2025. In this article, Vusala Ahmadova, Conducting Officer and NAV Oversight at Vistra Fund Management, weighs the potential vulnerabilities of private credit against its stabilising factors.