IDEAS home Printed from https://ideas.repec.org/p/bis/bisblt/128.html

AI disruption in private credit: exposure to software firms in BDCs

Author

Listed:
  • Fernando Avalos
  • Giulio Cornelli
  • Egemen Eren

Abstract

Business development companies (BDCs) have lent around $115 billion to software firms, which represents about a fifth of all their lending and over 80% of their fast-growing technology portfolios.Borrowers' revenue uncertainty posed by generative artificial intelligence has not affected these loans yet, and neither BDCs nor their equity investors have priced software exposure differently. Recently, credit spreads have narrowed, reducing the buffers to absorb losses, and a few large BDCs are exposed to a shared pool of borrowers, though low leverage and secured lending may limit spillovers.

Suggested Citation

  • Fernando Avalos & Giulio Cornelli & Egemen Eren, 2026. "AI disruption in private credit: exposure to software firms in BDCs," BIS Bulletins 128, Bank for International Settlements.
    • Handle: RePEc:bis:bisblt:128
    as

    Download full text from publisher

    File URL: https://www.bis.org/publ/bisbull128.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: https://www.bis.org/publ/bisbull128.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ted Berg & Jung Hoon Lee, 2026. "Measuring Counterparty Exposures to Private Credit," Briefs 26-02, Office of Financial Research, US Department of the Treasury.
    2. Iñaki Aldasoro & Sebastian Doerr & Daniel Rees, 2026. "Financing the AI boom: from cash flows to debt," BIS Bulletins 120, Bank for International Settlements.
    3. Davydiuk, Tetiana & Marchuk, Tatyana & Rosen, Samuel, 2024. "Direct lenders in the U.S. middle market," Journal of Financial Economics, Elsevier, vol. 162(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Puriya Abbassi & Iñaki Aldasoro & Sebastian Doerr, 2026. "Financing the digital economy: the role of private credit," BIS Quarterly Review, Bank for International Settlements, September.
    2. Giulio Cornelli, 2025. "When bricks meet bytes: does tokenisation fill gaps in traditional real estate markets?," BIS Working Papers 1311, Bank for International Settlements.
    3. Leonardo Gambacorta & Enisse Kharroubi & Aaron Mehrotra & Livia Pancotto, 2026. "Economic impact of AI in emerging market economies," BIS Bulletins 121, Bank for International Settlements.
    4. Lukyanov, Georgy, 2025. "Capacity, Patronage, and Exit from Mutual Credit," TSE Working Papers 25-1676, Toulouse School of Economics (TSE), revised Oct 2026.
    5. Alvaro Contreras & Peter Eccles & Paolo Siciliani, 2026. "Outsourcing and competition in the banking sector: the rise of Cloud Service Providers," Bank of England Staff Working Paper series 1199, Bank of England.
    6. Aldasoro, Inaki & Doerr, Sebastian, 2025. "Collateralized Lending in Private Credit," CEPR Discussion Papers 20310, Centre for Economic Policy Research.
    7. Ferrando, Annalisa & Lamboglia, Sara & Rariga, Judit & Schmidt, Maurice, 2026. "Adoption and investment in AI across the euro area. Insights from harmonised firm-level data," Occasional Paper Series 395, European Central Bank.
    8. Riccardo Russo, 2026. "Private Credit, SRTs and the Banking System: Mind the Protection Gap," BAFFI CAREFIN Working Papers 26274, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    9. Jon Frost & Kumar Rishabh & Vatsala Shreeti, 2026. "Global giants in the AI supply chain," BIS Bulletins 122, Bank for International Settlements.
    10. Georgy Lukyanov, 2025. "Capacity, Patronage, and Exit from Mutual Credit," Papers 2509.03086, arXiv.org, revised Jul 2026.
    11. Iñaki Aldasoro & Sebastian Doerr & Karamfil Todorov, 2025. "Retail investors in private credit," BIS Bulletins 106, Bank for International Settlements.
    12. Leonardo Gambacorta & Salvatore Polizzi, 2026. "Artificial intelligence and climate change: balancing innovation and sustainability," BIS Papers, Bank for International Settlements, number 174, November.
    13. Phurichai Rungcharoenkitkul, 2026. "The AI investment race," BIS Working Papers 1367, Bank for International Settlements.
    14. Jiacheng Zou, 2026. "Private Credit Markets Theory, Evidence, and Emerging Frontiers," Papers 2603.14491, arXiv.org.
    15. Fernando Avalos & Sebastian Doerr & Gabor Pinter, 2025. "The global drivers of private credit," BIS Quarterly Review, Bank for International Settlements, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bis:bisblt:128. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.