Private Credit Valuation Gaps Widen Across Portfolios
A Frankfurt School study finds more borrowers held by multiple business development companies carry divergent loan valuations as of June 30.
Updated on Nov. 3, 2026 in Corporate Finance
As of June 30, 12.3% of borrowers held by two or more business development companies had loan valuations differing by at least five percentage points, up from 9.3% a year earlier. Approximately one in 10 private credit loans held by BDCs were valued below 90% of face value, compared with 7.7% a year earlier.
Why it matters
Widening valuation differences across lenders may signal underlying financial deterioration in private credit borrowers. Markdowns in private credit often emerge more slowly than in publicly traded debt markets, making such gaps an early indicator for investors.
The study drew on US SEC regulatory filings, showing 12.3% of multi-BDC borrowers carried valuation gaps of at least five points as of June 30, up from 9.3% a year earlier. Roughly one in 10 BDC-held private credit loans was valued below 90% of face value, compared with 7.7% a year prior, though the underlying drivers of these markdowns remain unexplained.
The players
Frankfurt School of Finance & Management
A German business school whose researchers conducted the study on private credit valuation discrepancies across business development companies.
Sascha Steffen
An academic finance researcher at the Frankfurt School who is an author of the study on private credit loan valuations.
US Securities and Exchange Commission
The federal regulator of US securities markets, with whose filings the study's valuation data was prepared.
The details
Researchers at the Frankfurt School of Finance & Management, including author Sascha Steffen, compared loan valuations for borrowers held by two or more business development companies. The analysis drew on regulatory filings submitted to the US Securities and Exchange Commission.
Timeline
June 30, 2026: Measurement date showing 12.3% of multi-BDC borrowers with valuation gaps of at least five points.
June 30, 2025: Prior-year measurement showing 9.3% of such borrowers with valuation gaps.
Market Dynamics
The rise from 9.3% to 12.3% in multi-BDC borrowers with divergent valuations marks a continued widening rather than a stabilization. Private credit markdowns have historically emerged more slowly than in public debt markets, so this divergence may foreshadow further repricing ahead.
Investors holding business development company shares or private credit exposure may want to review how their funds value underlying loans, since valuation gaps across lenders can affect reported net asset values. Retail investors with indirect exposure through retirement or income funds should check holdings disclosures for private credit allocations.
The takeaway
Persistent gaps in how different lenders value the same borrower's loans can be an early signal worth tracking in fund disclosures. Comparing marks across lenders offers a practical way to gauge valuation risk in private credit holdings.
Further reading
For broader context on how lenders value corporate debt, explore Corporate Finance coverage.
