BDC Software Fair Value Marks Diverge in Cybersecurity Verticals Against Similarly Focused BSL Market Prices; Analytics Verticals Experience Select Fundamental Weakness, Price Declines

Credit Research: Michael Soricillo Relevant Item: Link to Octus’ BDC Database   Key Takeaways   Octus analyzed business development company, or BDC, software marks across a number of enterprise verticals to compare average fair value pricing to broadly syndicated loans, or BSL, within the same verticals. The report also compares credits across a risk scoring framework that takes into account displacement from artificial intelligence, risks to cloud migration and macro factors.   One of the biggest valuation gaps between BSL marks and private credit appears to be in security software companies. A number of companies with BSL have sold off sharply while comparable private credit marks for different companies but similar verticals remain near par. However, many of the challenges faced by the set of BSL companies could be idiosyncratic due to certain overleveraged companies not having cash to invest or one example in which a company’s loans sold off because it was not part of a Claude working consortium.   A number of companies that provide an analytics layer to organization, Overlay and Analytics segment, have seen sharp declines in pricing, in both BSL and private credit. Medallia recently entered into a debt for equity and new-money transaction with[...]