Private Credit Exodus Turns Moody’s BDC Outlook to Negative

A swelling wave of redemptions has driven Moody’s Ratings to revise its outlook for private credit investment vehicles to negative, after holding the line at stable for over two years.

The ongoing exodus from nontraded vehicles, which make up 60% of the sector’s assets, and elevated leverage in their publicly-traded counterparts are key drivers of the credit grader’s revision, according to a report Tuesday. The “disruptive force” presented by artificial intelligence is expected to compound the group’s worries and put it “on defense” in the coming year, Moody’s analysts wrote.