The Financial Stability Board (FSB) has warned that private credit, a near $2 trillion sector, is at risk due to lack of standardized data, opaque valuation practices, complex funding structures and vehicles. The FSB highlighted the sector's increasing interconnectedness with banks, insurance companies, and investment managers through bank credit lines, revolving facilities, and strategic partnerships. The report suggested that these links could exacerbate market stress. It also highlighted the high leverage in the sector, which is largely in sectors like technology, healthcare and services, and some private credit borrowers relying more on payment-in-kind loans. The watchdog is urging national regulators to increase their supervision of the industry.