Ares Management's biggest private-credit fund took more losses from software loans in the second quarter.

But the business-development company is benefitting from a drop in competition from other fund managers that are hurting even more.

-- The $29 billion Ares Capital Corp. fund swung to a $188 million quarterly unrealized loss from existing loans compared with the same period in 2025, but the result was an improvement from a $306 million loss in the first quarter.

-- While net new loan commitments declined by $323 million in the quarter, the fund did more new deals in June and July, especially with larger companies, fund executives said. Borrowers are agreeing to tougher terms because rival private-credit firms that raise money from individual or "retail" investors have been forced to cut back lending after increased client withdrawals, the executives said.

-- The portion of defaulted loans in the fund rose to 2.4%, up from 2.1% in the prior quarter but below the 3% long-term average.

-- Writedowns of loans to some software companies at risk of disruption from AI worsened. Ares slashed the valuation of its loan to Cornerstone OnDemand-one of the more widely held private-credit loans-to 63 cents on the dollar from about 72 cents three months earlier. It cut Symplr Software loans to around 65 cents from roughly 70 cents.