Fitch Ratings warns AI, digital infrastructure could weaken global credit
Fitch Ratings is sounding the alarm about how artificial intelligence (AI) and big investments in digital infrastructure could impact global credit.
While AI might make things more efficient, it also risks cutting jobs and shrinking tax revenues, especially in developed countries.
Investors across Asia's major markets are keeping a close eye on these shifts, plus ongoing worries about private credit and government debt.
Private credit faces NAV, liquidity risks
Fitch also highlighted that private credit markets are getting trickier to navigate because of complex loan structures like NAV loans, which make it tough to see who owes what.
Direct lending is seeing more defaults than traditional loan bundles (CLOs), but so far recovery rates aren't too bad.
Liquidity is becoming a bigger issue as more everyday investors join in, especially when people can't pull their money out quickly.