Morgan Stanley is considering making an allocation to a new private credit fund that would include capital from external investors, from its balance sheet, according to a report by Bloomberg citing unnamed sources.

The New York-based firm has reportedly held preliminary discussion about injecting $1bn to $2bn of capital into the new vehicle, which also would look to raise between $4bn and $5bn in limited partner commitments.

The fund would then look to make large senior-secured, performing unitranche loans to closely-held borrowers through, although no final decisions on the new vehicle have been made, including the final size of the fund and its leadership.