The private credit challenge
Private credit has become one of the fastest-growing asset classes in global finance, surpassing $2 trillion in AUM and is on track to nearly double within five years. Yet growth is outpacing the infrastructure needed to manage it responsibly.
Most private and middle-market borrowers remain unrated. Financial disclosures arrive incomplete, sparse or inconsistent, and investment teams face mounting regulatory scrutiny and governance expectations, all while operating in an environment where comparability across exposures is the expectation, not the rule.
The result is a market where risk decisions carry significant weight but often lack the analytical grounding that sophisticated investors require.
Moody’s for Private Credit
Moody’s for Private Credit provides a structured, data-driven framework to support more consistent, transparent, and explainable credit risk assessment for unrated borrowers across the investment lifecycle.
At its core are model-based credit risk signals designed to introduce a common, Moody’s Rating’s rating-aligned reference point where none exists today.
Introducing EDF‑X CreditGradient
A new way to understand where credit risk is heading.
EDF-X CreditGradient leverages Moody’s extensive credit intelligence, including more than two decades of rating histories, a deep pool of private company financials, and the Credit Research Database to produce credit risk signals expressed on a Moody’s Ratings scale.
Rather than reducing risk to a single probability of default, the model reflects how credit professionals assess borrowers by incorporating a range of scorecard-aligned factors such as size, leverage, profitability, industry dynamics, geographic exposure, and sovereign risk.
With as few as four borrower-level inputs, CreditGradient delivers:
- A model-estimated credit risk measure aligned to Moody’s Ratings scale
- Transparent, explainable risk drivers that show why the estimate was produced
- Regular monthly updates, including periods between financial reporting cycles
Delivering more transparency
Moody’s for Private Credit addresses two longstanding challenges in private credit; the absence of consistent, ratings-anchored risk signals for unrated borrowers, and the lack of structured, explainable workflows for translating those signals into data-driven investment decisions.
Strategic pillars of Moody’s for Private Credit
The strategic pillars of Moody’s for Private Credit focus on driving consistency, comparability, transparency, and a data-driven foundation for more disciplined credit risk assessment.
| Consistency | Help reduce the underwriting variability with grounded assessments, even when data is limited. |
| Comparability | Identify concentration risk and portfolio blind spots with output on a familiar scale across private and public exposures. |
| Transparency | Support decisions to stakeholders with visibility into what drives each assessment. |
| Foundation | Provide assessments grounded in one of the industry’s largest private company datasets and decades of observed credit outcomes. |
Supporting the full investment lifecycle
These pillars span the investment lifecycle, from initial screening and underwriting through ongoing portfolio monitoring, and can help support regulatory reporting.
| Screening & Origination | Access the risk profile of new opportunities before committing resources to full due diligence |
| Underwriting | Ground investment decisions in consistent, Moody’s Ratings-anchored or methodology-aligned assessments with explainable rationales that can be shared with credit committees. |
| Portfolio Monitoring | Track credit quality changes on a monthly basis, even between financial statement dates, to identify emerging risk concentrations early. |
| Governance & Reporting | Produce data-driven credit assessments that help support regulatory and internal governance standards. |
| Relative Value and Pricing | Benchmark private exposures against public comparables using a common Moody’s Rating’s ratings scale, supporting spread curve development and internal pricing strategies. |
A stronger foundation for private credit risk decisions
A more disciplined private credit workflow requires clarity, consistency, and defensible reasoning at every step. Moody’s for Private Credit delivers an analytical layer that enhances credit judgment by grounding assessments in established methodologies, transparent risk drivers, and explainable outputs.
In markets where information is limited and decisions carry weight, Moody’s for Private Credit solutions support independent credit analysis and investment decision-making.