Ratings Agencies Turn Negative on Business Development Companies Amid Private Credit Concerns
Ratings agencies are downgrading their outlook on business development companies (BDCs) due to concerns over high leverage levels and writedowns in software investments, exacerbated by the rise of AI and higher interest rates. This has led to potential stress on BDC dividends and net investment income, with Moody's and Fitch highlighting risks in the sector. The impact is being felt across the private credit market, particularly in securitized vehicles like middle market CLOs.
Topics: AI impact BDCs CLOs leverage private credit rating agencies software sector