Institutional investors across Asia consider AI disruption, private credit growth, and sovereign risk as major credit risk drivers, Fitch Ratings said in a recent release.
Overspending in AI and digital infrastructure has become a main theme for investors, as it introduces completion risk, high capital expenditure, and pricing pressure, Fitch said.
While AI increases efficiency gains, it also carries risks from labor displacement and declining tax bases, mainly in developed markets, the rating agency said.
For private credit, heightened asset competition and opacity risks due to the use of layered finance structures could muddy leverage and creditor positioning, Fitch said.
Investors call for stronger oversight in private credit, especially in terms of rating criteria and market practices, according to Fitch.
The rating agency also sees lingering macroeconomic volatility due to Gulf tensions and supply chain disruption, with a proposed peace deal moving focus to the conflict's residual and indirect effects.