Understanding Private Credit Ratings and Who Provides Them

Private credit ratings have surged in recent years, growing from a relatively niche asset class into a cornerstone of portfolios. While individuals and institutions are increasingly moving away from bank lending, the industry can often feel opaque. Unlike public markets — where credit data is easily accessible — investors face a clear transparency gap when dealing with the private sector and how to assess risk. This shift in global lending habits has underscored the importance of private credit rating agencies.

It underscores the need for standardized frameworks to measure capital efficiency and risk management. A rating from the leading private credit rating providers does more than assign a letter grade — it provides a regulated, universal language for institutional investors, limited partners and regulators to evaluate the creditworthiness of non-public enterprises. These assessments are integral to unlocking better terms and ensuring that portfolio valuations reflect real-world credit risk.

1. KBRA

KBRA has built its industry-wide reputation on its track record of excellence in the middle-market sector. The agency is noted for its “investor-first” approach, delivering timely and transparent research that unravels the complexities of private debt. KBRA distinguishes itself through its thoughtful and robust methodologies, such as its proprietary “K-Series,” which are specifically designed to address the unique risk profiles of private corporate borrowers.

2. S&P Global Ratings

As one of the world’s most established rating providers, S&P Global Ratings brings immense data resources to the private credit space. It is particularly sought after for its “Credit Estimates” service, which is a staple in the management of middle-market Collateralized Loan Obligations. Its frameworks are highly standardized, enabling easy comparison across massive portfolios.

3. Moody’s Ratings

Moody’s Ratings are known for its “Private Ratings for Investors” service. This offering provides confidential, monitored credit rating principles that are highly transparent. By leveraging its deep history in public credit, Moody’s provides investors the ability to apply high-level analytical standards to the historically inaccessible private asset world.

4. Fitch Ratings

Fitch Ratings is recognized for its agility and forward-looking methodologies, particularly in the middle-market financial institutions space. Its “Private Placement” services emphasize sector-specific expertise, ensuring niche nuances in infrastructure are inferred. Fitch maintains a lower analyst-to-issuer ratio, which often allows for more dedicated interaction between the agencies and the parties transacting.

5. Egan-Jones Ratings Company

Egan-Jones differentiates itself through an investor-supported business model that aims to provide strong objectivity in its evaluations. In the private placement market, the firm is known for its speed of delivery and analytical precision across a wide range of instruments, including asset-based financings. Its “Fund Methodology” is particularly relevant for alternative investment managers seeking investment-grade ratings for credit funds and feeder fund structures.

6. Morningstar DBRS

Morningstar DBRS provides essential insights into the private debt universe, focusing specifically on middle-market borrowers and private corporate credit. The agency integrates global and local market data into its assessments. Its regular publication of credit chartbooks and specialized fund finance scales makes it a valuable resource for institutional allocators seeking to benchmark risk across evolving sectors such as asset-based finance and private credit CLOs.

7. ARC Ratings

ARC ratings has established itself as a globally recognized provider with a solid focus on European middle-market sectors. Headquartered in London, the agency utilizes a forward-looking methodology that balances rigorous quantitative and qualitative analysis of management. ARC is frequently sought after for its specialized insights into direct lending and structured finance.

Key Features at a Glance

The following tables provide a high-level comparison of the leading providers based on core focus areas.

How We Evaluated the Notable Private Credit Rating Providers

We utilized a merit-based approach to curate a list of providers, ensuring all showcased institutions can deliver well-established methodologies in a market characterized by limited public transparency. With nearly 50% of institutional investors planning to increase their allocation to the sector, making private credit a permanent pillar of global finance, the importance of vigilance in selecting effective rating providers is highlighted. The qualities of the best private credit ratings provider include:

1. Analytical abilities and framework: The methodologies of any competent private rating provider should be tailored specifically to private markets, not a copy-and-paste of public institution analysis. We assess both qualitative and quantitative outcomes, ensuring a holistic understanding of analytical rigor.
2. Middle-market expertise: Private credit ratings are most commonly used in midsized enterprise settings, so providers’ track records should reflect expertise in appropriate sectors.
3. Regulatory acceptance: It is imperative that providers are recognized by relevant regulatory authorities in their operating jurisdictions (e.g., SEC/NRSRO in the U.S., ESMA in the EU.

1. Surveillance and ongoing monitoring: Agencies should conduct ongoing assessments of institutions, even if they have previously been rated positively. The best private credit rating providers forgo one-and-done assessments for more perpetual surveillance
2. Technological infrastructure: A provider’s technological infrastructure is a strong differentiator. Having a collection of up-to-date tools and software means improved efficiency, better risk management, and expanded market opportunities.

Navigating the Future of Private Credit With the Best Private Credit Ratings Providers

As the world of private credit continues to expand, selecting the right provider is essential for directing capital costs and maintaining standing with investors. Beyond efficiency, beyond technology, the goal of private credit rating agencies is to provide a common language and framework that can bridge the information gap between lenders and borrowers. A vetted rating showcases the transparency necessary to justify complex deal structures and form relationships built on trust, serving as the difference between an opaque private transaction and a high-performing investment.