The US private credit market is heading in the wrong direction: The median listed Business Development Company (BDC) is now trading at just 0.73x its net asset value (NAV), the lowest since 2020. BDCs are publicly traded firms that lend to small, mid-sized, and distressed US businesses, offering retail investors access to private credit markets. In other words, they are priced at 73% of their claimed worth. The median listed BDC price-to-NAV has been consistently declining over the last 18 months. To put this into perspective, the ratio collapsed to ~0.35x in 2008, meaning the market valued BDCs at just 35 cents on the Dollar. This comes as concerns are growing that AI will disrupt business models of software firms and make it harder to refinance debt, with the average BDC holding ~20% exposure to the sector. The private credit industry is under heavy pressure.(The Kobeissi Letter)