(HedgeCo.Net) International Monetary Fund Managing Director Kristalina Georgieva has sounded the alarm over the explosive growth of private credit, saying the $2 trillion market could pose risks if left unmonitored.

Speaking at the IMF’s annual meetings in Marrakesh, Georgieva admitted the sector “keeps me awake at night,” citing its opacity and limited regulatory oversight.

Nonbank lenders now account for more than half of global corporate financing, a trend accelerated by post-crisis regulation that restricted bank balance sheets.

“Private-credit funds have stepped in where banks retreated,” Georgieva said. “That can be good — but we need data, transparency, and supervision.”

The warning follows several high-profile defaults by private-credit-backed companies, including auto-lender Tricolor and manufacturer First Brands, raising questions about underwriting discipline.

Still, some investors say concerns are overstated. “Default rates remain modest, and private credit provides flexibility the traditional market lacks,” said Jason Lee, CIO at Crestline Investors.

The IMF urged national regulators to coordinate oversight and share information across borders. While few expect immediate intervention, analysts say the remarks mark a new phase of regulatory scrutiny for private lenders — long viewed as the “shadow banks” of modern finance.