FILE PHOTO: The tower of the headquarters of the Bank for International Settlements (BIS) is seen in Basel, Switzerland March 18, 2021. REUTERS/Arnd Wiegmann/File Photo
Basel: Watchdogs are concerned about the “substantial” risk to investors in the private-credit market after it emerged that almost 40% of funds don’t have skin in the game.
The decision by so many managers to avoid putting their own capital into the vehicles creates an “incentive misalignment”, the Bank of International Settlements (BIS) said last week. The risk is that industry players could prioritise their profit over investors’ returns.
