Moody's: U.S. banking industry loans nearly $300 billion to private credit providers

The credit rating agency Moody's published a report indicating that loans from the U.S. banking industry to private credit providers have surged to nearly $300 billion, warning that if underwriting standards loosen, smaller lending institutions may face higher risks.

The report stated that loans from the U.S. banking industry to non-depository financial institutions now account for 10.4% of total bank loans, nearly three times the 3.6% recorded a decade ago. The growth of such loans has surpassed all other lending activities since 2016.

Moody's also noted that, in addition to the risk exposure to private credit providers, the U.S. banking industry had $285 billion in loans to private equity funds as of June this year, along with $340 billion in unused credit available to these borrowers