Marathon founder says private credit has excessive exposure to the software industry; direct loan default rate may reach 15%

Gelonghui February 26 — According to Bloomberg, Bruce Richards, Chairman and Founder of Marathon Asset Management LP, stated that private credit exposure to the software industry is too large, but the risk of transmission to the broader market is minimal. Richards said that problems in the software industry “are like a train coming down the tracks, visible from afar,” and pointed out that leverage levels for software companies in the private credit market are around 10 times. He predicted that default rates on direct loans could reach 5% to 6% in the coming years, but defaults will mainly be led by the software sector, which could see default rates as high as 15%.