Credit Pressure Rises in BDC Debt Investments with Software Sector Leading
Stress is increasing within the private credit market, particularly among companies held by Business Development Companies (BDCs). As of June 2026, nearly 583 out of approximately 5,000 BDC-held firms showed signs of credit pressure. This represents an 8% increase from March and a 25% rise since the end of 2025. The software sector leads in exposure to debt stress, accounting for 36% of investments at fair value despite representing only 22% of BDC holdings overall. Dollar exposure is growing faster than borrower count as larger companies show signs of financial strain. First-lien term loan and unitranche investments under pressure have surged by 92% since the end of 2025, reaching $47 billion. Notably, most stressed borrowers are still making cash payments; about half did not use payment-in-kind (PIK) interest in the last year. The findings highlight growing concerns for BDCs and their investors as software companies face increasing financial challenges.
Topics: BDC Debt Investments Credit Pressure Market Stress Software Sector