Private Credit's Biggest User Is in an Even Worse Place

As private credit managers mount a spirited defense of their industry to discourage investors from fleeing, they’ve found at least one persuasive argument for why much of the cash they lent to software firms at the start of the decade shouldn’t be at risk. If the leveraged buyouts they financed do get into difficulties because of competition from artificial intelligence, the private equity owners are first in line to lose money.

That could be bad news for the pension plans, sovereign wealth funds, university endowments and rich folk that funded private equity’s massive bet on software when euphoria peaked in 2021. It’s shaping up as a poor vintage.