Asset managers Blackstone and BlackRock marked down the net asset values of private credit funds in the first quarter, reflecting continued pressure from troubled loans in the software sector and broader concerns about AI-driven disruption, according to a report by Reuters.
Blackstone Secured Lending Fund saw its net asset value per share fall 2.4% to $26.26, while BlackRock TCP Capital Corp recorded a steeper 5% decline to $6.72 per share.
Both firms attributed part of the markdowns to underperformance and credit stress in software-related borrowers, a sector that represents a significant portion of their portfolios. Blackstone disclosed that roughly 20% of its fund was allocated to software companies, while BlackRock TCP held about 27% exposure at quarter-end.
Investor scrutiny of private credit portfolios has intensified as AI-related concerns increasingly challenge traditional software business models, raising questions over earnings stability and long-term valuations.
Within Blackstone’s portfolio, non-accrual loans—those not paying interest as scheduled—stood at just over 3%. The firm highlighted ongoing restructuring progress at its largest troubled exposure, software company Medallia, where it plans to inject additional capital alongside partners to reduce leverage and support AI-related product development.
The fund reported that nearly half of its quarterly loan markdowns were concentrated in a small number of stressed positions, with the remainder spread across the portfolio and linked in part to broader sector concerns.
Despite valuation pressure, Blackstone Secured Lending Fund maintained its quarterly dividend at 77 cents and recorded $450m in repayments alongside $325m in new investments.
BlackRock TCP reported $32.7m in realised losses and additional unrealised losses tied in part to exposure to distressed software borrower Pluralsight, alongside other portfolio companies. The fund also continued share buybacks and declared a 17-cent quarterly dividend.
The results follow similar valuation cuts across the private credit sector, including recent markdowns reported by peers in the alternative asset management industry as software-linked credit risk and AI disruption concerns continue to weigh on asset valuations.
