Roughly $40 billion in debt tied to software and services companies is scheduled to mature in 2028, marking the largest single-year concentration of repayments the sector has faced in recent years. The figure sits within a broader wave of obligations approaching over the next decade and is drawing attention from lenders, investors and analysts watching the sector closely.
Data circulating in credit markets suggests around $100 billion in software debt will fall due between 2026 and 2029. Beyond that window, another $70 billion is expected to mature after 2030. The scale of the upcoming repayments highlights how heavily software firms relied on borrowing during years of easy credit, when interest rates were low and financing was widely available.
Much of the debt maturing in 2028 sits deep within speculative-grade territory. Market participants say the majority carries ratings of B- or lower, placing it firmly within the junk category. There is no investment-grade issuance within this particular maturity cluster, which raises questions about how easily some borrowers will be able to refinance once their obligations come due.
For lenders and private credit funds, the timing creates a complicated backdrop. The software sector has been one of the most active areas for leveraged lending over the past decade, attracting both banks and private credit managers seeking yield in a low-rate environment. Software now represents about 12 per cent of the entire leveraged loan market, making it the single largest sector exposure.
That concentration means any refinancing difficulties could ripple across credit markets. When a large share of borrowers operates with lower credit ratings, refinancing typically becomes more expensive when interest rates rise or when lenders turn cautious. Several credit analysts say the coming maturity wall will test how resilient many of these companies are after years of rapid expansion supported by cheap borrowing.
Private credit funds have played a central role in funding the sector. Many mid-sized software companies turned to these lenders rather than traditional banks for financing, especially in leveraged buyouts backed by private equity groups. The deals often relied on optimistic assumptions about revenue expansion and steady demand for subscription software services.
However, the economic environment has shifted since many of those loans were written. Interest rates have risen across major markets, increasing the cost of refinancing. At the same time, investors are paying closer attention to balance sheets and cash flow sustainability.
Another variable now shaping the discussion is the rapid rise of artificial intelligence. While AI is widely viewed as a powerful technology shift, it is also creating uncertainty for many software companies whose products could face new competition or require heavy investment to remain competitive.
Credit specialists say this dynamic adds another layer of risk for lenders. Companies that borrowed aggressively during the previous decade may now face pressure to update products, expand infrastructure or rework business models to keep pace with AI-driven development. Those investments can weigh on cash flow at the same time debt repayments approach.
Some analysts believe stronger software firms with reliable subscription revenue and large customer bases will be able to refinance without major disruption. Many of these businesses continue to generate steady income streams from enterprise clients, providing lenders with confidence about repayment capacity.
Others may find the process more difficult. Smaller or highly leveraged firms with weaker margins could face tougher negotiations with creditors. In certain cases, lenders may demand higher interest rates, stricter terms or partial debt reductions before agreeing to extend financing.
Credit markets have already shown signs of becoming more selective. Over the past two years, several leveraged loans in the technology sector have traded at discounted prices, signalling investor concerns about future repayment risk.
At the same time, private credit funds remain under pressure to deploy capital raised during the lending boom. Some market observers believe this could support refinancing activity, as funds seek opportunities to keep money working rather than allow loans to lapse.
The outcome may vary widely across companies. Large publicly listed software firms often maintain access to broader capital markets, including bond investors and equity financing. By contrast, private firms backed by buyout funds may depend heavily on negotiations with a smaller group of lenders.
For the broader technology sector, the approaching debt maturities serve as a reminder of how quickly financial conditions can shift. Borrowing that looked manageable in an era of low interest rates now faces a very different environment.
Investors will be watching closely over the next few years as the first wave of refinancing begins. The period between 2026 and 2029 could offer an early indication of how prepared software companies are to manage both financial pressures and technological change at the same time.
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