Marathon’s Richards Fears 15% Direct Loan Software Defaults (1)

Private credit is way too exposed to the software industry, according to Marathon Asset Management LP Chairman Bruce Richards, but there is little risk of contagion to the wider market.

The problems in software were “a train coming down the tracks that you could see from some distance,” he said in an interview with Bloomberg Television, pointing out that software companies in the private credit markets are about 10 times levered.

The default rate in direct lending might be as high as 5% to 6% over the next few years, but will be dominated by the software segment where ...