Last Quarter's NAV Is No Longer a Defensible Fair Value

What's New

Carrying a fund stake at its last reported NAV, with no adjustment for current markets, breaches ASC 820. Kroll makes the case in a September 29 analysis of the SEC staff statement issued a day earlier. Its valuation team argues that conviction in a loan cannot stand in for what a buyer would pay today. Index-driven models fail the same test when they import market moves that do not fit the asset. Valuation committees should document an adjustment, or a reasoned decision against one, every quarter.

Why It Matters

Evergreen and semi-liquid funds that hold other funds often strike prices from lagged NAVs. Kroll treats that habit as a direct breach, and it says secondary-market pricing cannot be dismissed. Investors who subscribe and redeem at those prices bear the gap. The view that a performing loan earns a stable mark also weakens. Liquidity, contract terms and market risk change value even when the borrower pays on time.

By The Numbers

• Nearly 60%: growth in private credit held in registered fund portfolios through December 2025. Kroll says that expansion makes valuation discipline more consequential.

• 1 day: the gap between the SEC staff statement and Kroll's response.

• Daily: the valuation frequency Kroll says its tech-enabled service supports for any operating model.

Between The Lines

Kroll sells the remedy it describes. The article closes by endorsing independent valuation specialists to challenge assumptions and strengthen evidence. Kroll offers that service, plus the Kroll StepStone Private Credit Benchmarks for tracking market moves. Its warning about index-driven models also protects the value of loan-level data over generic indices. The pitch for daily valuation points to where Kroll sees demand heading: semi-liquid products that need a defensible price far more often than once a quarter.

The Wrap

Fair value for private credit is moving toward documented, market-referenced judgment that gets refreshed between borrower reports. Kroll's reading carries weight if auditors adopt it in year-end testing and secondary trades keep building a usable price record. It loses force if funds show their calibrated models already capture market moves without outside data. Audits of year-end 2026 statements will show which practice wins.