Bankruptcy, Liability Management, and Credit Message Board

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Strategies & Market Trends : Bankruptcy, Liability Management, and Credit

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To: Sean Collett who wrote (1)	12/19/2025 4:07:46 PM
From: Sean Collett	of 4

RE: Private Credit Bloomberg released a story today that the Financial Stability Board is concerned that private credit is seeing a rise in "ratings shopping". As I wrote in my piece on private credit, we are already seeing reports of EBTIDA adjustments, debt-for-equity swaps, bad PIK, and even synthetic PIK, and large differences in same loan valuations. As these issues continue to grow the need to shop ratings to those who are willing to look past these flaws becomes very likely. The article stated "The Financial Stability Board, which monitors global risks, has high-level concerns about the potential for ‘ratings shopping’ in private markets, where firms can seek grades on transactions from multiple providers and opt for the most favorable one, one of the people familiar with the supervisor’s work said. Officials at the Basel-based institute are also concerned that ratings in private credit are not subject to the same rules as securitization, where safeguards introduced after the global financial crisis typically mandate the use of multiple independent credit ratings and strict management of conflict of interests." The situation isn’t the same…but ya know…rhyming and such: “If we don’t give them the ratings they’ll go to Moody’s, right down the block. If we don’t work with them they will go to our competitors. Not our fault, simply the way the world works”. There is rotten crop in this field and the longer it is allowed the grow the more the rot will spread. Happy Investing, Sean

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