Fed Readies Survey of Private Credit Market Amid Growing Concerns

The Federal Reserve is launching a pilot survey to gauge private credit markets in the US. The Federal Reserve Bank of Dallas and the Federal Reserve Bank of New York are collaborating on this project, which aims to provide more visibility into new private credit lending activity.

According to the Federal Reserve, the direct lending market in the US is estimated to be over $1.3 trillion, comparable in size to both the high-yield bond and broadly syndicated loan markets. However, unlike public credit markets, where conditions can be tracked through public market data, visibility into new private credit lending activity is limited.

The survey will gather information about the availability of credit, credit provision, lending standards in private credit markets, and the implications for the broader economy and monetary policy. It will segment the direct lending market into three borrower sizes: upper middle market with earnings before interest, taxes, depreciation, and amortization (EBITDA) of greater than $100 million, middle market with EBITDA of between $30 million and $100 million, and lower middle market with EBITDA of less than $30 million.