A second Trump administration is likely to break with its predecessor on private credit regulation, turning the focus away from enhanced disclosure requirements, according to Moody’s Ratings.

US banks face enhanced disclosure requirements starting this year, such as reporting unused lending commitments and disclosures about private credit loans.

The new administration may shift priorities toward “reassessing the existing regulatory framework, with a focus on capital formation,” according to a 2025 private credit outlook report from Moody’s.

One potential regulatory move flagged by the Moody’s analysts would be a change to the definition of “accredited investor” at the SEC. Under President Trump, the SEC could broaden the definition to allow retail investors greater access to private markets, potentially creating fundraising opportunities for private credit firms.

The ratings agency forecast that private credit’s focus on retail investors would intensify in 2025. Already, retail private debt AUM is growing at a faster pace than institutional AUM, although it’s still less than 20% of total private debt AUM, Moody’s said.

Moody’s warned of potential risks for retail investors due to illiquidity and shorter investment horizons.

“Private market illiquidity, which suits institutional investors with long-term horizons, poses risks when applied to retail-focused ETFs, potentially leading to liquidity mismatches and underperformance during market stress,” the report said.

“Private assets require a long-term investment horizon that is often matched with institutional investors’ long-dated liabilities, such as life insurers’ payouts or asset managers’ long-dated lockup periods for their investors. Private assets have thrived, in part, on these structural features that prevent investors from redeeming their investments on short notice.”

In its outlook, Moody’s also forecast significant growth in private credit’s asset-backed finance activity, which has drawn in alternative asset managers looking for bigger returns.

Moody’s forecast “at least” $1 trillion in private credit asset-backed finance origination over the next five years, funded by insurance investments, dedicated ABF funds, and banking partnerships.

“While ABF is not new to private credit, managers are focusing more intently on new opportunities such as data centers, where financing demand is soaring,” said Moody’s.

The analysts said they expect partnership formation between private lenders and banks will continue in 2025, driving the ABF push, “but the large banks will also make it a strategic priority to further scale up the private credit investment capabilities within their asset management businesses.”