Palmer Square Capital Management has reduced the net asset value of its private credit fund by 10% in the first quarter, reflecting continued pressure across parts of the private lending market, according to a report by Reuters.
The markdown comes as investors increasingly scrutinise private credit portfolios, particularly exposures linked to software companies, amid concerns that artificial intelligence could disrupt certain business models in the sector.
According to the fund’s latest disclosure, software-related borrowers account for roughly 10% of its investments at fair value. The portfolio comprises 283 investments across 214 companies, with total fair value of about $1.2bn at the end of March.
The firm also reported a modest level of income generated through payment-in-kind (PIK) structures, where borrowers defer cash interest payments by adding them to principal balances. PIK income accounted for a small share of overall investment income.
