(Bloomberg) -- The Bank of England joined the growing list of policymakers and market participants concerned about the booming $1.6-trillion private credit market.

The central bank’s Financial Policy Committee on Wednesday highlighted riskier types of corporate borrowing such as private credit and leveraged lending as particularly vulnerable to “sharp revaluations” in credit markets, as higher interest rates could make it harder for companies to refinance debt.

“Affected businesses may reduce investment and employment and, in some circumstances, may default,” the bank said in its latest financial stability report. “If these losses are significant, this could cause an excessive tightening in risk appetite, disrupting the functioning of some markets and tightening credit conditions in the real economy.”

Read more: US Senators Warn of Hidden Dangers Lurking in Private Credit

The warning comes a week after two senior Democratic senators asked US regulators to deepen their assessment of the risks private credit may pose to the financial system. 

UBS Group AG Chairman Colm Kelleher last month expressed concerns about an asset bubble forming in private debt. “Private credit is sometimes presented as being a sort of universe of its own,” BOE Governor Andrew Bailey told reporters at a press conference on Wednesday. “Our analysis would be it’s much more interconnected with the leveraged world and with the private equity world.”

In its report, the BOE noted that while there is good visibility of risks in leveraged lending and high-yield bond markets, the “opacity of private credit markets makes risks in the sector challenging to monitor in the UK and globally.”

That lack of transparency, combined with the fact that frequent repricing of private credit assets is rare, “increases their vulnerability to sharp and correlated falls in value,” it said.

--With assistance from Greg Ritchie.

(Updates with comment from BOE governor and warnings from US senators and UBS chairman)

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