Less than 20 years after the 2008 crisis, credit‑rating agencies again face scrutiny, this time for how they assess the private‑credit market. UBS chair Colm Kelleher warned that insurers were engaging in “ratings arbitrage,” a concern echoed by US senator Elizabeth Warren and the Financial Stability Board, which warned that private credit has not been tested in a prolonged downturn. The core questions—who pays the agency, how conflicts are managed, why privately rated bonds default twice as often as public bonds of the same grade—echo the 2008 debate. Private credit now rivals the high‑yield bond market, with insurers heavily invested; the sector is dominated by SaaS, where direct loans grew from about $8 bn in 2015 to over $500 bn by 2025, per the Bank for International Settlements. Covenant‑lite deals, now 21 % of direct lending, further erode oversight, and AI‑driven margin compression is set to hit maturity windows 2028‑2031.

Four reforms are urgent. First, the SEC should study an alternative to the issuer‑pay model, perhaps a random‑assignment scheme run by a public utility. Second, Dodd‑Frank’s expert‑liability provisions must be actively enforced. Third, a loan‑level disclosure regime—independent valuation for large pooled vehicles, standardized cross‑jurisdictional definitions—should be required. Finally, insurance capital rules should not rely solely on a single rating when the rated entity is the agency’s prime client; regulators must mandate independent corroboration or internal models.