Private Credit Could Amplify Shock in Next Crisis, Fitch Says

Private credit could be a “meaningful” transmission channel during the next crisis, amplifying a systemic shock to the financial system with negative repercussions for a broad range of investors, according to Fitch Ratings.

The fast-growing asset class has already exhibited “bubble-like” attributes including financial innovation, heightened competition, growing retail participation and rising leverage, the ratings firm said in a report Monday.

“The private sector warrants continued close monitoring and would benefit from increased transparency,” the Fitch analyst wrote, arguing that “more consistent disclosures would help market participants gauge risks and resilience.”

In spite of this, Fitch said it does ...