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Investing.com -- Major private capital groups have agreed to participate in a Bank of England stress test examining how the private credit market would respond to a major crisis.
Blackstone, Apollo, KKR, Ares Management, and CVC are among the firms that have volunteered to take part in the assessment, according to a Monday report by the Financial Times, which is expected to be officially announced this week.
The central bank’s "system-wide exploratory scenario" will evaluate the resilience of non-bank lenders that operate with lighter regulation than traditional banks. The test, scheduled for next year, will examine how private credit markets would perform during a severe economic shock.
The BoE plans to assess various segments of private credit, including leveraged loans, high-yield bonds, asset-backed finance, and private equity borrowing. The analysis will focus on how these markets would function in a crisis and what effects this might have on banks, the broader financial sector, and the economy.
Since the Bank of England does not directly regulate many of the largest private credit providers, it has relied on voluntary participation for this exercise. The stress test is also expected to include banks, insurers, and pension funds.
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