Private Credit Faces Turmoil as AI Disruption Rattles Software Loans
New York, Thursday, 5 February 2026.
Fears of AI disrupting software models have rattled private credit, with analysts warning default rates could hit 13 percent—more than triple the rate of the high-yield bond market.
The “SaaSpocalypse” and Structural Vulnerabilities
The private credit industry, which has grown rapidly by filling the void left by traditional banks, is now confronting what some market observers are calling a “SaaSpocalypse” or “loan-ageddon” [2]. The central concern revolves around the sector’s heavy exposure to software companies, a domain once considered a reliable growth engine but now facing existential threats from artificial intelligence disruptions [2][3]. While the high-yield corporate bond market holds a relatively modest 8 percent exposure to technology, UBS analysts estimate that between 25 percent and 35 percent of the private credit market is exposed to AI disruption risks [3]. Other sources peg the specific allocation to software loans at roughly 20 percent of private credit portfolios [1][3]. This concentration has created a precarious imbalance, leaving direct lenders significantly more vulnerable to technological shifts than the broader syndicated market [3].
Market Rout and Blue Owl’s deepening Crisis
The anxiety crystallized earlier this week when shares of major alternative investment firms plummeted. On Tuesday, February 3, 2026, stocks with significant private credit exposure, including Blue Owl Capital, TPG, Ares Management, and KKR, all suffered double-digit percentage declines [3]. Apollo Global Management dropped 7 percent, while BlackRock shed 5 percent [3]. This sell-off followed a precursor on Monday, February 2, when business development companies (BDCs) like Blue Owl Capital Corp and Ares Capital Corp saw their shares fall as concerns over software exposure intensified [4]. For Blue Owl Capital specifically, the damage has been prolonged; its shares have lost more than half their value over the past year [1].
Earnings in the Spotlight
As the market digests these disruptions, all eyes are on Blue Owl Capital’s fourth-quarter earnings report, scheduled for release today, Thursday, February 5, 2026 [6]. Analysts expect the firm to post earnings of $0.23 per share on revenue of $718.37 million for the quarter ended December 2025 [6]. While the firm manages over $295 billion in assets as of September 30, 2025, and maintains a robust 58 percent gross profit margin, the focus will likely shift from top-line growth to balance sheet resilience [6]. Specifically, investors will be scrutinizing redemption activity in the Blue Owl Capital Income Corp. fund to gauge whether the liquidity strain is contained or spreading across the firm’s broader portfolio [6].