By Matt Wirz

Moody's Ratings has changed its outlook to negative on Blackstone's largest private credit fund and a fund managed by Golub.

The credit-rating firm made the downgrade because of rising defaults in the private corporate loans made by the funds, which are known as business development companies, or BDCs.

The ratio of defaulted loans in Bcred, Blackstone' $79 billion BDC, jumped to 4.7% from 0.6% last quarter, while Golub Capital BDC's ratio nearly doubled to 2.3% from 1.3%. About 7% of performing loans in Bcred are marked below 90 cents on the dollar, an indicator of more potential defaults to come, Moody's said.

Moody's grades the funds Baa2-two notches above a junk credit rating-and recent writedowns contribute to elevated debt-to-equity ratios, or leverage, at both funds. The negative outlook could influence investors to demand higher yields to own the bonds the funds issue. That would increase the cost of debt that the funds use to help boost returns for investors in the funds.

Moody's highlighted the funds' high concentrations in loans to software companies that could face declining revenue because of competition from AI. Blackstone reports a 21% software exposure in its fund while Golub reports 26%.

Fears of future losses from software have prompted record numbers of investors in some funds to ask for their money back, increasing pressure on managers to either borrow more or sell loans to pay redemptions. Investors can withdraw money from Bcred but not from Golub BDC, which is publicly listed.

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June 02, 2026 10:16 ET (14:16 GMT)

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