New era of private credit growth raises concerns, Moody’s says

The rapid growth of private credit lending beyond its traditional market presents potential future risks to the U.S. economy due to lack of oversight and transparency, according to a new Moody’s Ratings report.

Banks in recent years have experienced a rise in competition from private credit lenders: non-bank firms offering non-publicly traded debt mainly to mid-sized corporate borrowers.

Pushed by increasing demand from investors, private credit lenders have recently branched out into alternative lending opportunities outside of this middle-market base such as asset-based financing, Moody’s said in a report published Thursday.