Moody’s Ratings says India’s move to allow banks to fund acquisitions could weaken the economics of the private credit sector. The rating agency argues that the change would likely affect one of the most profitable areas for private credit funds, potentially reducing returns by shifting acquisition financing toward banks. Moody’s links the potential impact to the scale and recent growth of private credit in India, noting that the sector has more than doubled over the past five years to about $25 billion in assets under management as of end-2025. Moody’s also points to the activity level in the market, saying annual transaction volumes have surpassed $11 billion. Taken together, the agency’s assessment is that the rule change may alter competitive dynamics in acquisition financing, with banks gaining a wider role in funding deals that private credit funds have supported. The sources collectively focus on Moody’s view of how the policy could affect private credit performance, without detailing specific implementation timelines or case-by-case outcomes.
Moody’s says India’s M&A bank-funding rule could squeeze private credit
Moody’s Ratings says India’s move to allow banks to fund acquisitions could weaken the economics of the private credit sector. The rating agency argues that the change would likely affect one of the m...
- Moody’s Ratings says India’s policy allowing banks to fund acquisitions could affect private credit funds.
- Moody’s expects the rule could squeeze returns in acquisition-related lending, a major source of profitability for private credit.
- Private credit in India has more than doubled over the past five years to about $25 billion in assets under management as of end-2025.
- Annual M&A-related transaction volumes in the sector are described as exceeding $11 billion.
- The assessment is based on Moody’s analysis of how financing competition may shift toward banks.
India's private credit sector has doubled in size over the past five years to about $25 billion in assets under management at the end of 2025, while annual transaction volumes have surpassed $11 billion, according to Moody's.
1 month agoIndia’s decision allowing banks to fund acquisitions can potentially hurt private credit funds as it would squeeze returns in one of their most lucrative businesses, Moody’s Ratings said.
1 month ago
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