Private Credit Market Sees Opportunity Amid Donald Trump's Tariff Policies, Moody's Reports

President Donald Trump‘s tariff policies are said to be providing a significant boost to the private credit market.

What Happened: This comes as companies are projected to shift operations to the U.S. and decrease their dependence on global supply chains, as per Moody’s Ratings.

Marc Pinto, the global head of private credit at Moody’s Ratings, is of the view that the current tariff policies are putting pressure on governments and revealing their limitations. He suggests that this is a scenario where the private credit market can step in and make a significant impact.

Pinto has observed a rise in deals in the infrastructure sector. He predicts that around $2.5 trillion will be invested in data centers over the next five years, with private credit expected to be a major contributor to the financing, reports Bloomberg.

However, Pinto also emphasized that large purchasers of private credit, such as banks and insurance companies, require more comprehensive information on deals. He noted that the intricacy of direct-lending transactions could lead to credit risk.

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Contrary to common perception, Pinto clarified that the private credit market does not solely cater to high-yield companies. It also serves investment-grade firms.

“Insurance companies primarily want investment-grade risk,” he said, signaling a shift in the private credit market.

Why It Matters: The shift in the private credit market, as indicated by Pinto, could lead to a significant change in the investment landscape. With the current tariff policies in place, the private credit market could play a pivotal role in supporting companies’ transition to domestic operations and reducing their reliance on global supply chains.

This could potentially lead to a surge in private credit investments, particularly in the infrastructure sector.

However, the increased complexity of direct-lending transactions also highlights the need for more transparency and detailed information on deals to mitigate credit risk.

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