AI disruption in private credit: exposure to software firms in BDCs (BIS)

> Business development companies (BDCs) have lent around *$115 billion* to software firms, which represents about a fifth of all their lending and over 80% of their fast-growing technology portfolios.

> Borrowers' revenue uncertainty posed by generative artificial intelligence has not affected these loans yet, and neither BDCs nor their equity investors have priced software exposure differently.

> Recently, credit spreads have narrowed, reducing the buffers to absorb losses, and a few large BDCs are exposed to a shared pool of borrowers, though low leverage and secured lending may limit spillovers.