CR TrendLines Topical Report: Software New-Issue BSL Covenant Terms: Until the Past 6 Months Looser than the Broader Market
Steve Miller: Executive - Covenant Review
17 March 2026
- How software loan covenant protections have shifted relative to the broader syndicated loan market.
- Which negotiated covenant features continue to distinguish software deals from other new-issue loans.
- What basket flexibility trends reveal about evolving lender protections in software documentation.
- How named blocker provisions compare between software issuers and the wider loan universe.
- Why recent market conditions may reshape expectations for future software loan issuance.
The Bottom Line™:
Software BSL secondary prices rebounded after an early-year sell-off. However, the sector remained under pressure overall.
New issuance stayed quiet as managers avoided adding software exposure. Market participants remain uncertain about future spreads and covenant outcomes.
The sector now faces a very different backdrop from prior years. Software loans had previously enjoyed especially favorable market positioning.
Covenant Review data shows software deals were generally documented more loosely than others. But that difference narrowed meaningfully over time.
By late in the period, documentation terms aligned with the broader market. Recent comparisons suggest software loan protections became far less exceptional.
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