KBRA releases research that examines the resilience of its ratings for fund finance structures and rated notes employed by middle market corporate lending funds.

Considering recent macroeconomic headwinds, the private credit industry is likely entering the most significant period of credit stress it has experienced since becoming an integral part of the U.S. and European corporate lending landscape. The impact of rising interest rates, the slowing global economy, inflation, and weaker private company valuations will likely present more sustained challenges to middle market borrowers and lenders, which could result in higher default rates.

However, KBRA-rated credit facilities, loans, and rated notes are well insulated from the credit impact of these challenges. The performance of middle market credit facilities and rated notes will be meaningfully protected through a combination of structural protections, disciplined underwriting, and comprehensive portfolio management.

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Related Publications

• Private Credit: 12% Is Not Affordable for Many Borrowers
• Private Credit: Well Positioned to Navigate the Looming Storm
• Private Credit: Private Corporate Credit Market Poised for Resiliency

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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