WASHINGTON - Global insurers plan to invest further in the coming years in the growing but opaque private credit market, according to a new report by Moody's Ratings.
Deemed riskier and less transparent than the public market, private credit deals involving non-bank lenders and middle-market companies have gradually gained market share in the U.S. and around the world over the last several years, as banks have avoided riskier loans to highly leveraged borrowers at elevated interest rates.Insurers have already increased their private credit holdings in the U.S.
Despite their lack of transparency, survey participants claimed that investment-grade quality assets account for most of their private credit holdings. "A number of companies we spoke to believe that short-term spread volatility in public markets can overstate underlying credit trends, and is a less important consideration than credit risk for private credit assets, which are held to maturity as long as an insurer is operating on a going concern basis," Moody's noted.
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