The California Public Employees' Retirement System remains unfazed by rising concerns over artificial intelligence's potential disruption to software borrowers in the $1.8 trillion private credit market. Chief Executive Marcie Frost told Bloomberg Television that the $615 billion pension's private debt allocation, currently at 4% of assets with an 8% long-term target, is sufficiently diversified to weather potential market volatility.

Despite fears that AI advances could weaken software companies' business models, Calpers maintains confidence in its private credit exposure. UBS analysts have warned that default rates could climb as high as 15%, compared with current levels between 3% and 5%. The pension's private debt commitments include substantial investments in major funds: $3 billion to Blackstone Real Estate Debt Strategies V, $2.3 billion to an Ares Senior Direct Lending Fund III, and $2.1 billion across three Blue Owl Capital funds.

Frost emphasized that the pension's team is not overly concerned about software exposure despite widespread market anxiety. She noted that Calpers had not been directly approached to acquire loans from private credit managers, though the pension remains open to such opportunities. This measured approach stands in contrast to broader market jitters about AI's impact on software borrowers, suggesting Calpers sees the current volatility as manageable within its diversified portfolio strategy.