The relationship between banks and alternative credit players is “evolving” and cross-capital structure solutions are “key to creating more reliable balance sheets”, according to US private credit investment firm Turning Rock Partners.
In its latest market commentary for Q1 of this year, the firm said that “US bank balance sheets are notably more conservative in 2025, following increased regulatory scrutiny and deposit flight concerns that emerged during the 2023 regional banking turmoil and persisted somewhat within certain sectors”.
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The tier 1 capital ratio for US banks continued to grow, it said, however “tighter credit conditions persist”.
Around 20 per cent of banks are continuing to tighten lending standards for commercial and industrial loans, particularly for mid-sized firms, according to the latest Federal Reserve Senior Loan Officer Opinion Survey.
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“This trend may contribute to a moderation in corporate borrowing and refinancing activity, especially among speculative-grade issuers,” Turning Rock said.
Overall, the firm said it sees the US economic outlook as “mixed” for the rest of 2025.
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