Latest Market Alert | 27 June 2026
Executive Summary
The Bank of England has launched a system-wide stress test of private markets, examining how private credit and alternative asset managers would respond to a severe global shock involving falling equity markets, supply-chain disruption, higher inflation and UK economic contraction.
Why it matters
Private credit remains a major source of capital for mid-market businesses, but regulators are increasingly focused on valuation opacity, liquidity risk and leverage across non-bank lending.
UK impact
UK borrowers may face more detailed lender scrutiny, tighter covenant discipline and increased focus on downside protection. However, credible businesses with strong security, cashflow visibility and risk-mitigation structures may still attract capital.
Global impact
Institutional investors remain interested in private credit, including emerging markets, but are becoming more selective. This may benefit well-diligenced transactions with robust governance and clear repayment pathways.
Our View
This is a risk and opportunity story. Poorly structured borrowers may find capital harder to access, but well-prepared sponsors and corporates can use stronger governance, insurance support and disciplined documentation to stand out in a more cautious lending market.
Risk Indicator: MEDIUM
Disclaimer
This market alert is provided for general information purposes only and does not constitute financial, legal, insurance or investment advice. Readers should obtain independent professional advice before making any commercial or investment decisions.