Private credit lenders are recalibrating their massive exposure to software companies as artificial intelligence forces a reckoning for the sector's largest bets.
Rather than triggering a blanket exit, prominent investors are telling CNBC that AI will ultimately forge winners and losers, pushing lenders to look past so-called "SaaSpocalypse" fears.
Wall Street's approach to software debt is shifting from broad avoidance to selective underwriting.
Lenders are increasingly structuring loan deals that exclude or ring-fence software components, reflecting growing unease over the disruptive potential of AI on legacy business models.
This recalibration is driven by the need to distinguish between companies with defensible moats and those facing existential disruption from generative AI tools.
The market move underscores a broader repricing of risk in the private credit space, where the software sector has historically been a favorite for yield-seeking capital.