Shadow banking bubble risks global shock, warns credit rating agency Fitch

The warning adds to a drumbeat of concern after the $12bn collapse of US auto parts giant First Brands was followed by two regional US banks sounding the alarm over bad loans.

This has prompted fears that the incidents could be symptomatic of more serious problems in the market.

Private credit involves companies borrowing from specialist funds, often run by private equity. Compared with traditional bank lending, there is less regulation and transparency.

The market’s size has ballooned 50pc in recent years, and the International Monetary Fund estimates that banks worldwide now have about $4.5tn of exposure to private credit players, not all of which has been drawn down.

Fitch was also seeing more creative ways of packaging the debt, known as “financial innovation”.

https://www.telegraph.co.uk/business/2025/10/29/shadow-banking-bubble-risks-global-shock-warns-fitch/


The private credit market $1.5 trillion

https://englundmacro.blogspot.com/2023/05/the-private-credit-market-15-trillion.html


History shows that investment crazes are often associated with financial innovation, new instruments created by Wall Street middlemen, surrounded by mystery and fueled by expectations of big future profits.

https://englundmacro.blogspot.com/2024/01/since-its-2022-bottom-s-500-adding-more.html





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