JPMorgan marks down software-linked private credit loans: report

JPMorgan Chase has marked down the value of certain loans linked to private credit funds, reported Financial Times.

The move comes as the $2 trillion private credit market faces increasing scrutiny from investors, and lenders amid fears of potential defaults and weakening valuations, particularly among software companies.

According to the report, the markdown applies to loans issued to software firms — one of the largest borrowing sectors fueling the growth of private credit.

The development also reflects rising caution among banks that provide financing to private credit funds using their loan portfolios as collateral.

JPMorgan marks down loans tied to private credit funds

The markdown of loan values affects credit extended to software companies, which have become prominent borrowers within the private credit ecosystem.

Wall Street banks such as JPMorgan typically act as lenders to private credit funds, providing financing backed by the loans held by those funds.

When the value of those underlying assets falls, the amount banks can lend against them declines.

The person familiar with the bank’s decision said the move was taken proactively and noted that the bank has marked down loans before.

The source added that remarking loans was “important to do when markets warrant it rather than waiting for a crisis to come along.”

The markdown could limit the availability of financing to private credit funds, which rely on bank funding to expand lending to corporate borrowers.

Investor withdrawals add pressure to private credit industry

The decision comes at a time when private credit funds are already facing growing pressure from investor withdrawals and rising concerns about credit risk.

Private credit refers to loans provided by non-bank lenders, typically to companies that may be considered too risky for traditional bank financing or those funding large leveraged buyouts.

While the market has grown rapidly in recent years due to its ability to arrange financing quickly, worries over deteriorating credit quality are increasing.

Several large asset managers have already faced redemption pressures this year.

BlackRock recently limited withdrawals from one of its flagship private credit funds after a surge in redemption requests.

Meanwhile, Blackstone said its BCRED private credit fund experienced a significant increase in withdrawals during the first quarter.

Cliffwater also reported redemption requests exceeding 7% from investors in its flagship fund.

The sector has also faced criticism regarding valuation transparency and potential exposure to distressed borrowers, including past bankruptcies involving a US auto parts supplier and a subprime auto lender.

AI disruption raises concerns about software borrowers

Software companies — one of the largest groups of borrowers in private credit — have drawn particular attention from lenders and investors amid concerns about the potential impact of artificial intelligence on their business models.

The sector’s vulnerability to technological disruption has raised questions about long-term earnings stability and debt repayment capacity.

JPMorgan Chief Executive Jamie Dimon recently signaled greater caution around these types of loans.

At the bank’s leveraged finance conference last week, Dimon said JPMorgan was becoming more careful when lending against software assets.

Banks have historically played a significant role in supporting the private credit ecosystem.

According to a Moody’s Ratings report based on Federal Reserve data, Wall Street lenders had provided roughly $300 billion in financing to private credit funds as of late June 2025.

JPMorgan alone had $22.2 billion of exposure to the sector.

However, tightening credit conditions and rising investor scrutiny suggest that banks may adopt a more cautious approach going forward as concerns about valuations, defaults, and industry transparency continue to mount.