Inflated ‘Private’ Ratings Are Masking Credit Risk, Columbia Study Says

A new Columbia Business School study says ratings underpinning a $1.8 trillion private-credit market are systematically understating investment risk. The findings raise concerns about credit quality and due diligence in one of Wall Street's fastest-growing asset classes. The news is negative for sentiment around private credit, though it is more likely to affect investor perception than trigger immediate price moves.

Analysis

A new Columbia Business School study says ratings underpinning a $1.8 trillion private-credit market are systematically understating investment risk. The findings raise concerns about credit quality and due diligence in one of Wall Street's fastest-growing asset classes. The news is negative for sentiment around private credit, though it is more likely to affect investor perception than trigger immediate price moves.