Institutions: In the private credit sector, software defaults are largely seen as a growing pain.

In its second half credit outlook report, the Yingeman Group stated that the software defaults that have garnered significant attention in the private credit sector are largely seen as growing pains for the industry, rather than the beginning of the end for the asset class as some have portrayed. The investment management company believes that credit quality and rigorous manager selection will continue to be crucial for private credit. The Yingeman Group suggests that the private credit industry may need to differentiate between software companies deploying artificial intelligence to enhance and solidify their competitive position, and those software companies whose core products are being replaced by artificial intelligence. The institution added, "Enterprise software with deep customer integration, high conversion costs, and strong pricing capabilities represent a completely different credit proposition compared to point solutions, commoditized [software as a service] products."