US private credit faces potentially higher defaults as software exposure weighs - Reuters

<a href="https://news.google.com/rss/articles/CBMiuAFBVV95cUxNVEd3QUxDY0xBSnZaMC1GYVA0dVpJODc3NXBBa0pZcmJuUjN6czB3VnlLVDFGMDQxb29VeVJKdWE3ZEVQMTYxMUtrTHc0clVUZ2pocFFHTkZ4am9EbzlOSEFoanZBQTFVNlFDOFdKMkdWV2tZVkxEWWJ5QkpVbUF2YWl6VGRCWnRGV2VsVVVGcDJjT2tXS0RWOUhlM2RVeUdNcUV2WEZtekIzX3M4VTk0Y2ExcDVrTGdR?oc=5" target="_blank">US private credit faces potentially higher defaults as software exposure weighs</a>&nbsp;&nbsp;<font color="#6f6f6f">Reuters</font>

The U.S. private credit industry is facing potential higher borrower defaults due to significant exposure to software companies, which are vulnerable to AI disruptions. Major asset managers have experienced declines in share prices amid these concerns.

A sell-off in software stocks has led to a decline in software loan bid prices, indicating a cyclical downturn for private equity and credit. The downturn is attributed to AI's impact on software valuations and growth rates.

Private credit lenders are increasingly avoiding investments in office properties due to uncertainties about future demand, intensified by rapid advancements in AI. This trend reflects broader concerns about AI's impact on various sectors.

Despite a record fundraising haul in 2025, Europe's private credit outlook is tempered by rising global risks, including exposure to the software sector threatened by AI and potential liquidity strains.

Banks' exposure to private credit, particularly loans to nonbank financial institutions, has raised concerns amid recent defaults and redemption requests. However, some analysts argue that these risks are manageable and not as severe as perceived.