US leveraged loan issuance from software firms drops to 9% this year, down from 21% in 2025, amid AI disruption concerns and reduced PE appetite.
Software companies accounted for just 9% of US leveraged loans issued in 2024, excluding repricings, the smallest share since 2013. The decline marks a sharp reversal from 2025, when software represented 21% of the market, and a peak of 24% in 2020.
Private equity-backed software deals have seen an even steeper drop, with their share of LBO financing falling to 17.5% from 34.5% last year. The sector’s struggles reflect growing investor caution over AI-driven disintermediation risks and a broader slowdown in tech M&A activity.
Market participants note a bifurcation in deal execution, with high-quality borrowers securing favorable terms while more complex or risky software firms face challenges. Dry powder remains abundant, but capital deployment in tech has slowed significantly.