Open figure viewer
Significance
Private credit fills the gap for firms that have grown too large for bank loans but are not large enough to tap bond and equity markets. While initially viewed as relatively low-risk, the lack of regulation and transparency around private credit -- plus its huge growth -- are raising concerns about liquidity and solvency.
Impacts
By tightening rules early in terms of market development, the EU risks keeping firms under tighter funding curbs than their US counterparts.
Private credit helps some firms buy themselves from public equity ownership and avoid bond markets, further reducing access to information.
Private credit may be higher than the USD2.1tn reported market size but the large undrawn component insulates participants against shocks.
Keywords:
International,
INT,
economy,
bonds,
capital flows,
equities,
finance,
investment,
regulation
© Oxford Analytica 2024. All rights reserved. This content contains general information about geopolitical, macroeconomic and social developments or (where stated) other matters. It does not contain advice or recommendations that may be relied on. Where links to external websites are provided, this does not indicate that Oxford Analytica or Emerald agree with, endorse or have checked for accuracy the contents of said sites.
2024
You do not currently have access to this content.
