{
  "id": 5291961,
  "title": "US private credit lenders mark down more software loans",
  "url": "https://urgent.news/2026/09/03/us-private-credit-lenders-mark-down-more-software-loans",
  "topic": "tech",
  "section": "Tech",
  "published": "2026-09-03T09:03:07.000Z",
  "source": {
    "name": "Private Equity Wire",
    "slug": "private-equity-wire",
    "url": "https://www.privateequitywire.co.uk/us-private-credit-lenders-mark-down-more-software-loans/"
  },
  "original_language": "en",
  "account": "Private credit lenders in the US witnessed a modest stabilization in their portfolios during the second quarter, yet they persisted in lowering valuations on particular loans, particularly in the software industry, according to a report by Reuters. The report highlighted that the volume of debt failing to generate income surged, underscoring the challenges faced by private credit following a tough start to the year. Weakened borrower performance, broader market spreads, and apprehensions about artificial intelligence-driven disruptions contributed to the declining valuations. An analysis of regulatory filings from 44 US business development companies (BDCs) revealed that their portfolios' fair value remained below the reported cost throughout the first half of 2026. These BDCs held assets valued at a combined $92.88bn at the end of June, in contrast to a cost of $95.19bn. The fair-value-to-cost ratio dropped from 99.25% at the end of 2025 to 97.77% in the first quarter and further to 97.57% in the second quarter. The decline was notably sharper than what is typically observed over a six-month timeframe, as noted by Chris Cessna, the managing director at Houlihan Lokey’s Portfolio Valuation and Fund Advisory Services. While the initial quarter saw the most significant valuation reductions, the second quarter saw a more substantial decline among specific borrowers. Software loans experienced a particular strain, with BDCs marking down 81% of their software loans throughout the year, as compared to 40% of loans in other sectors. Around 4% of borrowers had loans valued at less than 80% of their face value, up from roughly 1% between 2023 and 2025. Several major BDCs disclosed that losses were largely tied to a limited set of investments. Blue Owl Capital Corp attributed its second-quarter net asset value decline to a credit-specific markdown on one investment, while Ares Capital Corp noted that two software investments constituted over one-third of its $527m of year-to-date net unrealised losses. Similarly, Golub Capital BDC highlighted that losses were concentrated in a few junior debt and equity investments, and FS KKR Capital Corp also pointed out that a small group of investments was responsible for most of its markdowns.",
  "summary": "US private credit portfolios showed some signs of stabilisation in the second quarter, but lenders continued to reduce valuations on selected loans, particularly in the software sector, while the amount of debt no longer generating income increased, according to a report by Reuters.",
  "key_points": [
    "Volume of income-generating debt increased, highlighting challenges post-tough year start.",
    "Software loans saw 81% markdowns across BDCs, compared to 40% in other sectors."
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}