MSCI, Moody's launch private credit risk tool

MSCI and Moody's Corporation have partnered to launch an offering that assesses risks for private credit investments.

The solution integrates MSCI private capital data with Moody's EDF-X credit risk modelling tool.

MSCI said the new solution leverages consistent, independent probability of default (PD) scores and implied ratings for deeper risk insight across funds, sectors and geographies.

It also delivers credible, transparent credit risk metrics to boards, regulators and investors and support decision-making with insights backed by the independent methodologies, MSCI said.

The two firms said the solution "will be distinct from the services provided by Moody's Ratings, the credit rating agency, to the issuers in the private credit market."

MSCI is supplying data on more than 2800 private credit funds and 14,000 underlying companies.

The solution will also produce early warning signals that flag potential credit deterioration, macro-adjusted PDs incorporating both climate and economic factors, and loss given defaults at the facility level.

"As the private credit market evolves, investors are looking for trusted independent assessments to help benchmark credit risk and inform investments and monitor portfolios," Moody's chief executive Rob Fauber said.

"Our partnership with MSCI will play a critical role in providing these insights, helping market participants make informed decisions."

MSCI chief executive Henry A. Fernandez said the rapid growth of private credit continues to transform the global investment landscape while highlighting the need for increased transparency, consistent standards and independent risk assessment.