Wall Street’s new titans have differed significantly in valuing the $1.7bn of debts they provided to workforce technology company Pluralsight, highlighting the risk that some private credit marks are untethered from reality.

The loan is now at the centre of a messy restructuring that the $800bn direct lending industry is closely scrutinising, as Pluralsight’s investors prepare to turn it over to creditors. The divergent marks illuminate one risk regulators have raised about private credit: the inherent difficulty of valuing non-traded loans, which could expose investors in these funds to unforeseen losses.

How the debt and equity tied to all these buyouts are marked is critical because private credit has never played a larger role in financial markets in modern times. Preqin estimates some $10tn is tied up in private equity and credit funds. The marks, especially those that go untouched even when there are indications of trouble, mischaracterise the risk investors in funds face and the potential spillover those loans can have if they go bad.