Fitch Ratings has affirmed its BBB rating for one of Blackstone’s business development companies (BDCs), despite its largest industry exposure being to software.
The ratings agency reaffirmed the BBB rating and stable outlook for Blackstone Secured Lending Fund (BXSL) after conducting a broader peer review of BDCs, which included 12 publicly rated firms.
The review comes as the vehicles face rising redemption requests amid concerns over their exposure to software companies and the potential impact of artificial intelligence (AI) on the sector.
Fitch said BXSL’s largest industry exposure is to software, but this portion of the portfolio continues to show strong EBITDA growth with a substantial equity cushion.
“While Fitch will continue to monitor developments in the software portfolio, the agency believes credit implications of the AI evolution will play out over the medium term,” Fitch added.
The agency added that it believes BXSL’s software allocation is broadly in line with the peer BDC group based on reported figures.
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Fitch said that the rating affirmation reflects the “strong risk profile of the portfolio”, citing its focus on first-lien investments, the strength of BXSL’s relationship with its manager Blackstone, relatively low leverage and a “sound” liquidity profile.
On performance, Fitch said asset quality remains strong, with low non-accruals representing 0.64 per cent of the portfolio.
However, the agency noted structural constraints for overall BDCs, including the market impact on leverage, reliance on capital markets to fund growth and a limited ability to retain capital.
Fitch added that it expects BDCs to continue facing a competitive underwriting environment, weaker earnings and pressure on asset quality in 2026.
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