Could too much leverage bring down the system?

A Moody’s report has set tongues wagging regarding the risks or otherwise of private credit. We consider the arguments.

Is there systemic risk in the private credit market? And, if so, what are the chances of it spilling over into the broader economy?

The market has been abuzz with that discussion ever since Moody’s Investors Service issued a report late last month warning that “the mounting tide of leverage” sweeping into private credit’s “less-regulated ‘grey zone’ has systemic risks”.

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