Software companies face higher borrowing costs, tougher scrutiny as AI threatens businesses


FILE PHOTO: Figurines with computers and smartphones are seen in front of the words "Artificial Intelligence AI" in this illustration created on February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

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 U.S. and elsewhere have already paused or postponedfundraising 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.

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