Software cos face higher borrowing costs

NEW YORK, Feb 23 (Reuters): Software companies are delaying debt deals as higher borrowing costs and tougher scrutiny from lenders weigh on the sector, at a time when mounting pressure from artificial intelligence threatens their business models, industry sources said.

Software firms both in the US and elsewhere have already paused or postponed fundraising efforts as lenders and investors expect AI to upend the industry. These concerns have been underscored in loan markets, where spreads for risky companies have started to price in more defaults. AI jitters also affected private capital manager Blue Owl, whose shares slid after its latest move to sell $1.4 billion in assets to return money to investors.

"We expect AI disruption risk to be increasingly reflected over 2026 to early 2027, particularly for lower?quality credit sectors with elevated refinancing needs - and more so in the US than in Europe," said Matthew Mish, UBS' head of credit strategy.