Oct 22 (Reuters) – U.S. banks’ loans to private credit providers have surged to nearly $300 billion, Moody’s said in a report on Tuesday, and the ratings agency warned that smaller lenders could face heightened risks if underwriting standards weaken.
Loans to non-depository financial institutions (NDFIs) are now 10.4% of total bank loans, nearly three times the 3.6% exposure a decade ago, the report said. The aggressive growth outpaced all other lending activities since 2016, it added.
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Besides exposure to private credit providers, there was a further $285 billion in loans to private equity funds as of June, and $340 billion in unutilized commitments available to these borrowers, Moody’s said.
Analysts see the recent episodes as idiosyncratic events rather than a systemic concern in credit quality. Top banking executives have also downplayed the risk in private lending.
Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Leroy Leo
US banks’ surge in loans to private creditors may pose risks, Moody’s says
