Private Credit: A growing market with growing risks
Private credit, a fast-growing and highly opaque US lending segment, is driving up leverage in the financial system and concentrating economic activity within a small group of asset managers, with systemic risk. 
  • SUMMARY
  • REPORTS

  • Sector In-Depth
    23 May 2022|Moody's Investors Service
    Both public pension funds and insurance companies have aggressively invested in private equity and private credit in search of returns, and, in the case of public pension funds, to reduce state and local governments’ reported liabilities. However, public pension funds have increased their investment risk to a level that exceeds that of insurance companies, which instead have altered products and pricing rather than rely heavily on risky private assets.

    Sector In-Depth
    16 May 2022|Moody's Investors Service
    US high-yield bond and loan issuance has fallen sharply since Russia’s invasion of Ukraine, as investors turn more risk averse. While private credit lenders have an increasingly important funding role for leveraged middle market companies, the relationship with their private equity-backed portfolio companies is less transparent. Better terms among private credit lenders can also mask underlying risk.

    Sector In-Depth
    04 May 2022|Moody's Investors Service
    The growth of private credit has transformed a formerly niche market into one with much broader lending capacity that fuels M&A and refinancing growth opportunities for companies across the US economy. But as private credit has expanded, so too have the risks in a highly interconnected and deeply opaque market, with potential to cause cascading disruptions across the capital markets.

    03 May 2022|Moody's Investors Service
    The rapid growth of private credit is concentrating a large amount of assets with a small number of alternative asset managers.  It’s an opaque, highly leveraged and lightly regulated market, in which a broad deterioration in credit quality has the potential to cause cascading disruptions across the capital markets and broader economy.

    27 Apr 2022|Moody's Investors Service
    Ana Arsov of the financial institutions team explains how private credit, a fast-growing and highly opaque US lending segment, is driving up leverage in the financial system and concentrating economic activity within a small group of asset managers, with systemic risk.