Private credit valuations often depend on information that does not arrive neatly in time for a reporting deadline.
A borrower’s latest financial statements may be several months old. Updated forecasts may still be under review. Covenant calculations may not yet be available. Management may provide limited operating information between formal reporting periods.
But the valuation still has to be completed.
In a September 2026 staff statement, the SEC’s Office of the Chief Accountant and Division of Investment Management highlighted this challenge. The staff reminded firms that private credit agreements vary significantly in the quantity, quality, and frequency of information borrowers provide - and that a lack of timely information does not relieve management of its responsibility to estimate fair value.
The statement did not establish a new rule. It reinforced existing fair-value requirements under ASC Topic 820 and emphasized the importance of current information, market-participant assumptions, calibration, and transparent disclosure.
So what should a firm consider when the borrower data is late but the valuation deadline is not?
Why stale information creates a valuation challenge
Private credit instruments are often individually negotiated and do not trade in active secondary markets. As a result, their valuations may depend heavily on borrower-specific information and significant unobservable inputs.
Relevant information may include:
Revenue, profitability, and cash flow
Liquidity and available borrowing capacity
Leverage and debt-service coverage
Payment history
Covenant compliance
Updated forecasts and budgets
Collateral performance
Sponsor support
Refinancing capacity
Changes in management or business strategy
When this information is outdated or incomplete, firms face two risks.
The first is assuming that nothing has changed simply because no new information has arrived. The second is treating the absence of information as proof that the borrower’s condition has deteriorated.
Neither conclusion should be automatic.
Instead, the firm needs a disciplined process for identifying what is known, what remains uncertain, what other evidence is reasonably available, and how a market participant would view that information at the measurement date.
Seven steps to consider when current borrower information is unavailable
1. Identify exactly what is missing
“Stale data” can mean different things.
A firm may have complete quarterly financial statements that are several months old, or it may have only partial operating information. Payment and covenant data may be current even when full financial statements are not. In other situations, nearly all borrower information may be delayed.
The first step is to document:
The most recent information available
The period that information covers
The information normally expected but not yet received
The reason for the delay, if known
Whether the delay itself is unusual
When updated information is expected
This creates a clear record of the information gap instead of treating all missing data as equally significant.
2. Determine whether the existing information is still relevant
Older information is not automatically unusable. Its relevance depends on what has happened since it was prepared.
Firms should consider whether there have been significant changes in:
The borrower’s industry
Interest rates and credit spreads
Input costs or customer demand
The borrower’s payment performance
Liquidity or refinancing conditions
Comparable company performance
The broader economic environment
If conditions have remained relatively stable, existing information may continue to provide useful evidence. If conditions have changed materially, greater adjustment, corroboration, or analysis may be necessary.
The goal is not merely to identify the age of the information. It is to evaluate whether that information still reflects conditions at the measurement date.
3. Look for current borrower-specific signals
Full financial statements are important, but they are not the only potential source of borrower information.
Depending on the investment and the information rights available, firms may also consider:
Recent principal and interest payments
Requests to amend loan terms
Covenant waivers or resets
Draws on revolving credit facilities
Changes in payment-in-kind provisions
Updated collateral information
Management or sponsor communications
Changes in headcount, operations, or leadership
New financing activity
Recent acquisitions, divestitures, or restructuring activity
No single indicator necessarily determines fair value. Together, however, these signals may help a firm assess whether the borrower’s risk profile has changed since the last complete reporting period.
4. Consider reasonably available market information
ASC Topic 820 defines fair value as a market-based measurement. Management’s internal expectations are relevant only to the extent that they are consistent with assumptions market participants would use.
When borrower information is limited, the SEC staff noted that firms may need to consider the broader market environment, including:
Prevailing credit spreads
Current interest rates
Liquidity conditions
Comparable public instruments
Comparable private transactions
Secondary-market indications
Relevant credit indices
The return a market participant would require for the investment’s risk
Market information should not be applied mechanically. A broad credit index, for example, may not fully reflect an individual loan’s seniority, collateral, covenants, maturity, industry, or borrower-specific risk.
The firm should document why a particular market reference is relevant, how it differs from the instrument being valued, and what adjustments were considered.
5. Reassess the prior-period assumptions
One of the easiest responses to missing data is to carry forward the prior-period valuation. That may sometimes be supportable - but it should be the result of analysis, not the default.
Firms should revisit significant assumptions such as:
Discount rates
Credit spreads
Default probabilities
Recovery expectations
Financial projections
Enterprise-value multiples
Collateral values
Expected maturity or refinancing timing
For each significant assumption, the firm should ask:
What supported this assumption previously?
Has that evidence changed?
Is there new information that supports or contradicts it?
Would a market participant still use this assumption?
Does increased uncertainty affect the compensation a market participant would require?
Consistency in methodology does not mean assumptions must remain unchanged. It means changes - or the decision not to make changes - should be intentional and supportable.
6. Make uncertainty visible
A lack of current information may increase measurement uncertainty even when it does not point conclusively toward a higher or lower value.
Firms should avoid creating a false sense of precision. Depending on the facts and applicable reporting requirements, the valuation documentation and related disclosures may need to explain:
Which significant inputs are unobservable
How those inputs were developed
What information was unavailable
What alternative evidence was considered
Which assumptions required the greatest judgment
How changes in significant inputs could affect fair value
The SEC staff has cautioned that boilerplate or overly aggregated disclosures may not give investors enough context about the techniques, inputs, and uncertainty involved in private-asset valuations.
Clear, entity-specific explanations can help users understand not only the reported value, but also the judgment behind it.
7. Strengthen the process before the next deadline
A delayed-information problem may reveal a broader weakness in the valuation process.
The SEC staff encouraged management to consider whether the reporting provisions in an investment arrangement provide information at an appropriate cadence for ongoing monitoring and financial reporting.
Firms may want to evaluate:
Whether loan agreements require sufficiently frequent reporting
Whether reporting deadlines align with the firm’s valuation calendar
Whether covenant packages provide the necessary operating and financial data
Whether delays are tracked and escalated
Whether responsibility for obtaining missing information is clearly assigned
Whether alternative market data sources are established in advance
Whether valuation committees receive clear reporting about information gaps
Some existing agreements may be difficult to change. But lessons from current investments can inform future underwriting, documentation, monitoring, and valuation procedures.
What auditors may examine
Under PCAOB AS 2501, auditors evaluating accounting estimates may assess the methods, data, and significant assumptions management used.
This can include evaluating whether:
The valuation method is appropriate
Company-produced information is accurate and complete
External data is relevant and reliable
Significant assumptions have a reasonable basis
Assumptions are consistent with current market information
Changes in data sources are appropriate
Evidence that contradicts management’s conclusion was considered
Third-party pricing information provides sufficient appropriate evidence
A final value may appear reasonable, but the process still needs to demonstrate how management addressed the missing information and why the remaining evidence supports the conclusion.
A practical documentation checklist
When borrower information is delayed, a valuation file should make it possible for a reviewer to answer:
What information was available at the measurement date?
What expected information was missing or outdated?
Why was it unavailable?
What borrower-specific developments occurred since the last reporting period?
What market evidence was considered?
How were comparable instruments or indices selected?
What adjustments were made for differences?
Which prior assumptions were retained or changed?
What evidence supported or contradicted the conclusion?
Who reviewed and approved the final valuation?
This documentation does not eliminate uncertainty. It shows how that uncertainty was evaluated.
The absence of data is not the end of the analysis
Missing borrower information does not automatically mean an asset should be marked down. It also does not justify leaving a prior valuation unchanged without further consideration.
The responsibility remains to estimate fair value using the best relevant information reasonably available and assumptions that reflect the perspective of market participants.
That requires a process capable of combining borrower-specific evidence, broader market data, documented judgment, and effective independent challenge.
Harvest helps financial reporting professionals navigate complex and hard-to-price instruments through independent valuations, relevant market support, transparent methodologies, and clearly documented assumptions.
Is incomplete or delayed information making a valuation difficult to support? Contact Harvest Investments to learn how its valuation professionals can support your team.
