<\/p>\n
The fund finance market surpassed $1 \u200ctrillion in size this year, driven by demand from the growing private credit market, according to a new Moody’s Ratings report.<\/p>\n
Once an early-stage liquidity option for private funds, the fund \u200bfinance market has become a “critical backstop” for private credit lenders as they \u200bhave opened more funds in recent years, Moody’s analysts wrote.<\/p>\n
Private credit \u2060funds have also become key players both as borrower and lender in net \u200basset value (NAV) loans, which are backed by a fund’s underlying investments, Moody’s noted. NAV \u200bfacilities offer longer tenors and more flexible underwriting, offering higher returns in exchange for the greater risk tied to the underlying loan investments.<\/p>\n
The fund finance market has also seen a growth in \u200bhybrid structures that are secured by both NAV and investor commitments.<\/p>\n
The Moody’s analysts \u200braised concerns about the recent AI disruption of software companies, and the subsequent elevated investor withdrawals \u200cfrom private \u2060credit funds invested in software businesses.<\/p>\n
“Asset quality in US direct lending is weakening, and growing disruption from artificial intelligence is introducing additional stress, particularly on software companies,” the analysts wrote.<\/p>\n
Moody’s also highlighted the exposure of these NAV facilities to payment-in-kind (PIK) \u200bloans, which allow borrowers \u200bto defer interest \u2060payments and instead increase the principal due at maturity.<\/p>\n
“As private market fund investors are becoming more accepting of fund-level leverage, \u200bthe rise of private credit and fund finance are mutually \u200breinforcing,” the \u2060report’s authors wrote.<\/p>\n
“As the market expands, however, it has become essential for private credit fund managers to maintain prudent underwriting discipline and to rigorously stress-test leverage-on-leverage structures,” they \u2060added.<\/p>\n
Banks, \u200bwhich also lend NAV facilities, have begun bundling \u200bthese loans into asset-backed securities to transfer risk and tap capital markets to deepen the investor base \u200bfor these loans, the report noted.<\/p>\n
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The fund finance market surpassed $1 \u200ctrillion in size this year, driven by demand from the growing private credit market, according to a new Moody’s Ratings report. Once an early-stage liquidity option for private funds, the fund \u200bfinance market has become a “critical backstop” for private credit lenders as they \u200bhave opened more funds in […]<\/p>\n","protected":false},"author":1,"featured_media":5970,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-5969","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bez-rubriki"],"featured_image_src":{"landsacpe":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/04\/Global-money-2-1000x445.jpg",1000,445,true],"list":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/04\/Global-money-2-463x348.jpg",463,348,true],"medium":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/04\/Global-money-2-300x200.jpg",300,200,true],"full":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/04\/Global-money-2.jpg",1000,667,false]},"_links":{"self":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/5969","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/comments?post=5969"}],"version-history":[{"count":1,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/5969\/revisions"}],"predecessor-version":[{"id":5971,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/5969\/revisions\/5971"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/media\/5970"}],"wp:attachment":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/media?parent=5969"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/categories?post=5969"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/tags?post=5969"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}