By Heather Gillers
S&P Global's update on BDC software loans this week wasn't terrible, but it wasn't great either.
The ratings firm looked at $146 billion of business development companies and interval funds in technology, finding that 15.3% were paid with new debt instead of money, an approach known as payment-in-kind, in the third quarter of last year. That's up from 15% the previous quarter.
Only 12.7% of total loans were paid that way.
Payment-in-kind can indicate the borrowers are under financial pressure and short on cash. Defenders say it can be used strategically and is not always a sign of distress.
Concerns that new artificial intelligence products will pressure older software businesses and lead them to default on their loans have rippled through markets this year, driving down stocks for business development companies and private asset managers.
Making investors even more skittish is the reporting lag time typical in private markets. Three to six months can pass between the date for which a manager estimates the value of a loan and when that valuation and other data becomes public. That's why we're only now getting last fall's mixed BDC report.
This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).
(END) Dow Jones Newswires
March 19, 2026 14:00 ET (18:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
