U.S. private‑credit investors are feeling the pressure. A recent Reuters review of regulatory filings from 44 business development companies (BDCs) – firms that lend primarily to small‑ and medium‑sized businesses – found that the combined fair value of their loan portfolios dropped to $92.88 billion as of June 30, down from $95.82 billion at the end of 2025. The reported (amortized) cost of those loans stood at $95.19 billion, meaning the portfolio values are now modestly below cost.

Software borrowers drive the spread widening

While the average decline appears small, the analysis notes that the widening of spreads is concentrated in a minority of borrowers. Over‑levered horizontal software and services companies with real AI exposure are bearing the brunt of the stress, according to Anant Kumar, a global investment strategist at Benefit Street Partners. “The question for the second half isn’t whether the average drifts another 50 basis points, it’s whether that tail keeps growing,” Kumar said.

Most of the markdowns occurred in the first quarter of 2026, but a handful of BDCs reported additional losses in the second quarter, largely tied to these software‑focused borrowers. The broader book, however, remains close to par, suggesting that the sector‑wide impact is limited to a specific slice of the market.

Blackstone’s private‑credit fund sees redemption pressure

At the same time, Blackstone’s flagship private‑credit vehicle, the Blackstone Private Credit Fund (BCRED), is grappling with redemption requests that total roughly 10% of its outstanding shares for the third quarter. The fund, which manages $77.2 billion, received about $4.3 billion in repurchase orders, slightly down from $4.5 billion in the prior quarter.

BCRED is bound by a quarterly repurchase limit of 5% of net asset value (NAV). It has already repurchased shares equal to that limit and fulfilled roughly half of the prior quarter’s requests, leaving about $2.3 billion of redemption demand still pending. Analysts at TD Cowen estimate that the backlog represents roughly half of the third‑quarter requests, indicating that new redemption demand may have halved compared with the second quarter.

RBC Capital Markets echoed the view that the peak of redemption pressure likely occurred in the second quarter, and that the current backlog reflects a slowdown in fresh requests. BCRED’s net outflows to date amount to about 3% of NAV, partially offset by new subscriptions that represent roughly 2% of NAV. The fund attracted nearly $750 million in fresh capital during the quarter.

Broader private‑credit market shows mixed signals

Other non‑traded BDCs are also seeing a modest easing of redemption pressure. The Cliffwater Corporate Lending Fund reported redemption requests slipping to 16% of NAV from 17% in the prior period.

Despite the strain on wealth‑focused vehicles, institutional private‑credit fundraising appears to be rebounding. Goldman Sachs reported that global private‑credit fundraising reached $33 billion through August 25, putting the third quarter on track to match or exceed the $45 billion raised a year earlier. Institutional investors now account for more than 85% of private‑credit assets under management, according to the same source.

Overall, the data suggest a nuanced picture: while a subset of over‑levered software borrowers is driving higher spreads and modest portfolio markdowns, the broader private‑credit market is stabilizing, with institutional capital flowing back in and redemption pressure easing for many vehicles.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.