Oaktree Capital Management has moved to reassure clients that its exposure to software companies and direct lending strategies remains relatively limited, as parts of the private credit market come under increased scrutiny, according to a report by Bloomberg.
In a note to investors, co-founder Howard Marks said the firm’s exposure to software-related credit is “extremely small” both in absolute terms and compared with industry peers. He added that Oaktree has maintained a high underwriting bar for software transactions over the past 12–18 months, significantly reducing its participation in the sector.
The comments come as some private credit managers reassess their exposure to software borrowers amid rising concerns around earnings pressure, competitive dynamics and potential disruption from artificial intelligence. Certain funds have already begun reducing allocations or tightening lending standards in response.
Marks also highlighted that Oaktree’s direct lending exposure is comparatively modest within its broader credit platform. He noted that direct lending accounts for only a fraction of the firm’s private credit activities, which themselves represent less than half of its overall performing credit portfolio.
Overall, direct lending represents a small portion of Oaktree’s total assets under management, with the firm continuing to favour a more diversified approach across distressed debt, mezzanine finance and asset-backed strategies.
