Credit pressure increases on BDC debt investments, led by software

Credit pressure increases on BDC debt investments, led by software

Wed, September 23, 2026 at 6:56 PM GMT+3 1 min read

Stress is climbing in the private credit market, both in borrower count and dollar exposure, with software names accounting for 36% of debt under pressure, the largest share by sector, according to LCD's analysis of more than 180 BDCs. Of the roughly 5,000 companies held by BDCs a year ago, nearly 600 showed signs of some degree of credit pressure by June 2026.

Key findings:

• The number of BDC-held companies that showed some degree of credit pressure rose to 583 as of June 30, up 8% from March and 25% from year-end 2025.

• Dollar exposure is growing faster than borrower count as larger, more consequential names show signs of stress. The volume of first-lien term loan and unitranche investments under pressure rose by 92% since the end of 2025, to $47 billion.

• The software industry accounts for the largest share of borrowers under pressure, representing 36% of investments at fair value as of Q2, an outsized share relative to its 22% weight of the BDC universe overall.

• Most stressed borrowers are still paying cash. Out of the 583 companies on the watchlist at the end of June, roughly half did not use payment-in-kind (PIK) interest in the last 12 months.

The full in-depth analysis, including methodology, detailed findings and an Excel data pack, are available to PitchBook subscribers at All News - Credit News. For information, contact support@pitchbook.com

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This article originally appeared on PitchBook News