A new study from Columbia Business School put a number on something that’s been growing quietly for years: privately rated bonds held by U.S. life insurers jumped from $46 billion in 2018 to $481 billion in 2025 — a tenfold increase in seven years. The catch is in the name. A private rating is a credit grade that only the company being graded, and the investor buying its debt, ever get to see.
Most bond ratings are public. Anyone — a competitor, a journalist, a regulator, another investor — can look up why Moody’s or S&P gave a bond an A or a BBB, and challenge it if the reasoning looks shaky. This is very different from a public rating change that moves markets in real time. A private rating skips the public step entirely. The grade goes straight from the rating agency to the company that paid for it, with no public record and no outside scrutiny. And because the company being graded gets to pick which agency does the grading, there’s a built-in incentive to shop around for whoever hands out the friendliest number.
The Columbia researchers compared bonds carrying the exact same official rating but graded through different channels — public versus private. Privately rated bonds were about twice as likely to run into trouble later, even though they’d been stamped two to three notches higher than equivalent public bonds deserved. For an insurance company, a higher rating isn’t just a label — it directly lowers how much capital regulators require the company to hold as a cushion against losses. A better grade, quietly obtained, frees up real money.
This isn’t happening in a vacuum. The private credit market these ratings feed into has grown into a $1.8 trillion business, and a lot of the newest money flowing into it is chasing AI infrastructure. In August, Nvidia lined up financing platforms with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR aimed at mobilizing over $500 billion for data centers and AI hardware — much of it structured as the kind of private credit that leans on private ratings to bring insurance money in the door. When a rating is public, the market keeps it honest. When it isn’t, the only people checking the math are the ones who benefit from a generous number.
Not advice. Just how I see it.
My take : A grade no one else can check isn’t grading — it’s a favor.