The value of BlackRock and BlackStone private credit funds fell due to borrower debt
Blue Owl plans to reduce its share of loans to software developers "naturally"
The value of private credit funds has fallen due to troubled loans by software developers / Photo: Tada Images / Shutterstock.com
Private credit funds Blackstone, BlackRock and Blue Owl have reduced their net asset value (NAV) in the first quarter amid problems with borrowers from the software sector, Reuters reports. Investors fear that the development of AI could undermine the business models of some software developers, which has led to increased pressure on loans in the sector, the agency explains.
For example, Blackstone Secured Lending Fund decreased its net asset value per share by 2.4% and BlackRock TCP Capital decreased its net asset value per share by 5%. Both funds reported write-downs and losses on troubled loans. BlackRock disclosed Thursday that it recorded $32.7 million in net realized losses and $2 million in net unrealized losses, attributing them to losses on loans to troubled software company Pluralsight and other companies.
Blackstone said some of the revaluations came from distressed debt of companies that have already stopped paying on their loans, and the rest came from software developers for whom AI development has become a risk factor. The share of Blackstone Secured Lending Fund's distressed loans, on which borrowers are significantly behind on interest payments, was just over 3% last quarter, the fund said. It also informed on Thursday that its largest troubled loan - to software company Medallia - was progressing in restructuring, Reuters wrote.
Two Blue Owl funds also reported declines in net asset value per share on Wednesday, with Blue Owl Capital down 2.7% and Blue Owl Technology Finance down 4.8%. Blue Owl sold $1.4 billion in assets in the first quarter to maintain liquidity after an increase in requests from investors to withdraw funds due to fears of a "software apocalypse."
Blackstone has about 20% of its portfolio tied to software companies, while BlackRock TCP has more than 27%, Reuters writes. The share of assets linked to software developers in Blue Owl Capital's portfolio fell from 19% to 16% in the first quarter, the fund's CEO Craig Packer told analysts at a conference call, reports the agency. This occurred "naturally" as borrowers repaid loans, Packer clarified. "I think we will continue to be very cautious on the software, and as payments come in, we'll probably look to continue to reduce it," he added.
This article was AI-translated and verified by a human editor
