Private Credit Software Exposure Hits 32% in Octus’ Q1’26 BDC Portfolio Analysis; BSL Selloff, Equity Write-Downs Could Lead to Lower 1L Pricing; 2028-29 Maturity Wall Gets Pushed Out Slightly

Credit Research: Mark Fischer Relevant Document: BDC Database   Key Takeaways   Private credit lenders’ exposure to software companies represented approximately 32% at cost and fair value as of the end of the first quarter of 2026, according to Octus’ bottoms-up analysis of business development company, or BDC, portfolios.   Fair-value pricing and the number of loans priced below 90% of par increased to 8.4% of all loans as of the end of the first quarter. Alternatively, software loans paying interest in kind as compared to all cash declined in the first quarter.   The drop in fair values over the same time period was less than what has been observed in the broadly syndicated loan market. Additionally, private credit lenders reported sharper drops in software equity pricing, which could be a leading indicator of further direct loan write-downs.   Although lenders had some success pushing out maturities over the last two quarters, 35% of software principal is still set to mature in 2028 and 2029. The percentage of business development company, or BDC, investments in software companies was approximately 32% as of March 31, according to an analysis of 175 public and private BDC portfolios. BDCs’ software exposure represents[...]