Private Credit’s Rapid Evolution Is Raising Risks, Moody’s Warns

Private credit’s fast-changing landscape is introducing new layers of complexity and risk, according to Moody’s Ratings.

In a wide-ranging report set to be released Monday, the credit grader warns that novel financing structures are obscuring leverage at borrowers, while the spread of payment-in-kind debt is increasing refinancing risk. Analysts also flagged that lenders are surrendering core investor safeguards to win deals, a shift they say will likely reduce payouts in distressed situations.