Brookfield's Flatt: Private credit software loans not systemic

Brookfield's Flatt: Private credit software loans not systemic

Brookfield’s Flatt: Private Credit Software Loans Not Systemic

Bruce Flatt, CEO of Brookfield Corp., has downplayed concerns about systemic risks in private credit markets, despite a recent surge in distressed tech debt. The CEO emphasized that while software-related loans face stress, the broader private credit sector remains resilient. “Nobody really has all the answers here,” Flatt acknowledged, but he argued that long-term fundamentals for private credit remain intact.

The current turmoil stems from a sharp decline in software-as-a-service (SaaS) valuations, with over $17.7 billion in U.S. tech loans slipping into distressed trading levels in the past four weeks. This brings total distressed tech debt to $46.9 billion, according to Bloomberg Intelligence. SaaS firms, heavily backed by private lenders, are particularly vulnerable to shifting market dynamics, including AI-driven disruptions and macroeconomic pressures.

However, Flatt and other industry leaders defend the sector’s structural safeguards. Private credit lenders typically maintain significant equity cushions, reducing the likelihood of losses compared to public market counterparties. Brookfield, which manages $603 billion in fee-bearing assets, has positioned itself as a strategic partner rather than a traditional lender, leveraging its long-term track record to secure favorable terms.

The CEO also highlighted broader tailwinds for private credit, including regulatory constraints on banks and the appeal of high yields. Brookfield’s private credit business, which includes direct lending and infrastructure financing, has attracted $34 billion in fund inflows since July 2025. The firm anticipates continued growth in specialized areas such as real estate and asset-based finance, where competition remains less intense.

While some lenders, like H.I.G. Capital, report rising inquiries for distressed debt solutions, Flatt cautioned against overreacting to short-term volatility. “The real risk in private credit is not a sudden explosion, it’s a slow burn,” noted Oxford economist Ludovic Phalippou, echoing industry caution.

Brookfield’s confidence aligns with broader market optimism. Despite tighter credit spreads and maturing loans, private credit default rates remain low, at under 3% for U.S. senior-secured loans. As investors navigate a shifting landscape, the firm’s focus on long-term value creation—rather than short-term market fluctuations—remains central to its strategy.

Bloomberg, February 2026: Bloomberg, February 2026
Brookfield, Private Credit Opportunities: Brookfield, Private Credit Opportunities
The Globe and Mail, February 2026: The Globe and Mail, February 2026