Definition
Under IFRS 13 and ASC 820, fair value is an exit price: the amount that would be received to sell the instrument in an orderly transaction between market participants at the measurement date. For private credit that price is rarely observable, so it is estimated with a discounted-cash-flow model, calibrated to the transaction price at origination and updated for changes in credit quality and market spreads. Most positions sit at Level 3 of the fair-value hierarchy, because the significant inputs — the credit spread, recovery and discount rate — are unobservable.
Why it matters in private credit valuation
- Private credit has become a core institutional allocation, but the absence of a market price puts the burden of fair value on the holder’s model and governance.
- Auditors, LPs and risk committees increasingly expect marks that are independent, reproducible and documented — not a single analyst’s judgement.
- A mark is judged on its evidence: calibration to origination, sensitivity to the assumptions that move it, and a clear trail from inputs to output.
Related
Glossary terms
On markst
Independent valuation, on your own positions
markst values private credit independently on a published, reproducible methodology — marks an auditor and an LP can read straight through. Request access or book a demo. You can also read the valuation methodology or see Verus, the valuation engine.