For years, software was the darling of the BDC world — stable, high-margin, and seemingly immune to economic gravity. But that “bulletproof” narrative is shifting fast. What started as a valuation correction in public equities is now tearing through the debt and loan markets, and the spillover into business development companies (BDCs) is no longer just noise. Widening spreads show that the capital structures of levered software companies are being tested by a new reality: the AI disruption.