The Credit Edge by Bloomberg Intelligence Bain Sees Software Debt Defaults Spiking
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Feb 26, 2026 Angelo Rufino, head of special situations at Bain Capital and veteran private credit investor, outlines rising software loan stress. He discusses how AI could pressure SaaS valuations and trigger refinancing strains. He also covers private investment-grade credit, data center and asset-backed finance trends, plus the growing appeal of music-royalty and aviation-linked deals.
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Software Default Rates Could Spike
- Default rates in software loans could peak materially above broad leveraged-loan averages.
- Angelo estimates defaults could reach high single digits to low double digits in that sector.
Software Defenses Versus AI Pressure
- Software retains defensive features—high gross margins, ARR, sticky contracts—but AI may undercut pricing and duration.
- Rufino expects price declines, shorter renewals and lower leverage attractiveness even if core cash conversion remains.
Prefer Partnership Capital Over Tight Credit Carry
- Avoid relying on tight spread carry alone; pursue partnership capital and equity-oriented solutions where risk-reward is poor.
- Rufino says with spreads ~300bps the fixed-return tradeoff lacks compensation versus bespoke structured opportunities.