Software Deferrable Exposure Rising in U.S. Middle Market CLOs

FR icon
Content hub / Article / Fitch Ratings / Software Deferrable Exposure Rising in U.S. Middle Market CLOs

Click here to learn more.

Technology-software assets in deferrable asset exposure are increasing within U.S. middle market (MM) collateralized loan obligations (CLOs) under Fitch’s surveillance. Selected indentures have also evolved their definitions of “Deferrable Obligation”. These trends drive elevated aggregate deferrable exposure in MM CLOs.

Across the MM CLO universe, technology-software has increased in share and has emerged as the leading industry for deferrable asset exposure since 2025. Seven out of 13 managers with CLOs still in reinvestment report technology- software as their primary or secondary deferrable industry class. However, trustee data indicates only a portion of these loans have actual Payment-in-Kind (PIK) amounts, with the majority carrying only small PIK balances. This suggests the credit impact remains contained.

Contact: Winnie Fong
winnie.fong@fitchratings.com

Contact Winnie Fong
2026 Private Credit Investor Survey

Share your perspective

2026 Private Credit Investor Survey

Institutional investors, RIAs and financial advisors - we want to hear from you. Take this two-minute anonymous survey and receive the results report.
Take the survey
PitchBook's H1 2026 Global Private Debt Report

Report

PitchBook's H1 2026 Global Private Debt Report

Strong fundamentals, but uncertainty remains.
Download

Latest news

    US leveraged loan launches reach five-month high in September

    The US leveraged loan market recorded $93.6b of launches in September, marking the busiest month of primary market activity since…

    Read More

    Information technology topped nonaccruals on a cost basis

    The information technology sector moved from second place in the first quarter to the top of the list in the second quarter

    Read More

    KBRA DLD Default Indices

    Read More