- Beyond Banks
- Posts
- Moody's Report: Alt Lenders Outpace Banks in ABL Space
Moody's Report: Alt Lenders Outpace Banks in ABL Space
$1.3T Private Credit AUM Surge
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/0121bb44-5de6-43eb-9a50-693b23a56fd6/Newsletter_Images__44_.png?t=1720838324)
Moody's Ratings has released a report highlighting the rapid expansion of private credit beyond its traditional middle-market focus. The report underscores the growing prominence of alternative lenders in the broader financial landscape.
Key points:
Market Expansion
Private credit lenders are diversifying into new territories, including asset-based financing and investment-grade lending, driven by investor demand and competitive pressures.
Bank Competition
Traditional banks are pushing back, refinancing $14 billion of private credit debt and doubling their leveraged loan issuance for M&A deals compared to last year.
AUM Growth
Major alternative asset managers have seen their credit AUM surge to $1.3 trillion in Q1 2024, up from $481 billion in Q4 2019.
Regulatory Concerns
The IMF and other regulatory bodies have expressed caution about the sector's rapid growth and potential systemic risks.
Transparency Issues
A recent U.S. appeals court decision vacated an SEC rule aimed at increasing private fund transparency, potentially delaying enhanced oversight.
New Opportunities
Private credit firms are tapping into asset-based financing markets, which offer significant growth potential beyond traditional middle-market lending.
The report emphasizes the transformative impact of private credit on the lending landscape while noting the challenges of market opacity and regulatory scrutiny. As the sector continues its explosive growth, it's reshaping the dynamics of corporate financing and challenging traditional banking paradigms.
Our Opinion:
With AUM hitting $1.3T, Alternative Lenders are not just competing with banks - they are redefining the game. Their pivot to asset-based financing and investment-grade lending shows we're more nimble and innovative. Sure, regulatory concerns exist, but their ability to provide capital where traditional banks can't is undeniable. The challenge now? Balancing explosive growth with smart risk management as they continue to disrupt the lending landscape. This isn't a bubble; it's the new normal in corporate financing.
1-Minute Tutorial Video: How to set up threads and runs using OpenAI API
There are a lot of unique use cases only possible with the OpenAI Assistant API that can benefit business operations. See our AI Financial Tools!
Headlines You Don’t Want to Miss
Banks face a double whammy as Q2 net interest income drops despite loan growth, due to shrinking deposits and falling net interest margins. The sector's earnings are further squeezed by increased reliance on costly funding sources and higher loan loss provisions.
California's DFPI has revoked Synapse's lending license due to multiple violations of state laws, including breaches of lending regulations and failure to comply with regulatory authorities. The fintech company also faces a hefty $2.575 million fine for its infractions, which included inadequate financial reporting.
KBRA has assigned preliminary credit ratings to BLAST 2024-3, a $500 million auto loan securitization originated by DriveTime, the largest subprime-focused used car retailer in the US. The ratings were determined through a comprehensive analysis of factors including borrower financials, debt service coverage ratios, and transaction structures.
Schedule a FREE Demo Call with Jordan
Get Free Access to our Alternative Finance Disclosure Law Helper GPT
Get Free Access to our Cobalt Modern Underwriter GPT
Get Free Access to our Alternative Funding Expert GPT
Get Free Access to our AI Credit Risk Tool
Create an account to Get Free Access to our Secretary of State AI Tool
![]() | Subscribe on our YouTube Channel here |
See us on LinkedIn |