Private Credit Valuations Slip as Software Sector Strains

The combined fair value of investments across these BDCs fell to $92.88 billion by June 30, trailing the $95.19 billion reported cost. This marks a deeper discount than the previous year-end, where fair value stood at $95.82 billion against a cost of $96.54 billion. While these aggregate figures show a modest decline, industry observers point to a growing dispersion in performance. Anant Kumar of Benefit Street Partners notes that the downward pressure is concentrated among over-levered horizontal software firms, particularly those attempting to integrate AI, rather than a broad-based collapse across lending books.

Simultaneously, liquidity pressures persist at Blackstone’s $77.2 billion Private Credit Fund (BCRED). The fund received $4.3 billion in redemption requests for the third quarter, nearing its quarterly repurchase limit of 5% of net asset value. Analysts suggest that much of this volume consists of carry-over requests from previous quarters that went unfulfilled. While TD Cowen estimates that these backlogged orders account for half of the current redemption demand, the ongoing outflow highlights a divergence in the market: retail-focused vehicles face persistent redemption hurdles, even as institutional fundraising for private credit shows a robust recovery, with global totals on track to match or exceed last year's $45 billion pace.