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Private credit firms strike fossil fuel deals as banks back off

Private credit involvement in deals involving fossil fuel businesses has increased significantly in recent years as managers move into a space vacated by banks concerned over the climate risks involved, according to a report by Bloomberg.

The report cites data from alternative investment industry analytics company Peqin as revealing that the value of private credit deals in the oil and gas industry topped $9bn in the 24 months up to the end of 2023, up from $450m arranged in the preceding two years. Those figures are based on the limited pool of deals reported publicly or disclosed directly to Preqin.

The increase comes amid wider adoption by banks of fossil-fuel exclusion policies, on the back of regulatory and reputational concerns, with the shift particularly pronounced in Europe, where climate regulations are stricter than in other jurisdictions.

Lenders stepping up restrictions on fossil-fuel loans include BNP Paribas SA and ING Group NV.

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