I'm not a SWE, (I'm a data engineer) but this jives with what I saw while looking for work. I'm not a particularly good DE, so I was out there for 18 months. There were still plenty of listings but not many of them were in "tech" companies in the traditional sense. Part of this was leaving a tech hub for what is very much not one, but the biggest issue that I found in landing work was that I was now competing for relatively boring $100k+ jobs with guys who were working $200k+ jobs in 2020 - 2023. The 3 - 6 "tech" orgs that used to employ these folks regionally just aren't really hiring that much.

As I understand it the situation is much worse than that, the existing debt is floating rate so in some situations can put previously sustainable companies into the red. This of course also affects their ability to refinance so it can spiral from there unless they take drastic measures (which still might not be enough).

I was thinking we should have our own internal saas-pocalypse where I work, or at least threaten one to our vendors.

It used to be that vendors could tie their cost to the value they provide, but now their cost is more correlated to the token spend to reverse engineer and re-implement them (using appropriate clean room controls etc). If their cost goes to far above the AI-driven re-write, they're more likely to get jettisoned (absent some other moat not included purely in the technology).

I'm sure we can all think of products that charge a fair whack in license fees, but would not be massively difficult to re-implement (or at least for the subset of features actually used).

2018-2022 was also when interest rates were at historical lows so companies were placing 'big bets' with less-but-not-negligible risks. Same was true for hiring too - remote work + lots of liquidity meant a massive hiring spree that we're now, with our 5x higher interest rates, very much in the comedown for (and which many leaders pin on 'AI-assisted work' and not on their really rash and stupid bets not panning out).

> I suspect that this is actually driving the software engineer hiring slow-down

Are we in a slow-down anymore? Anecdotally I feel things were rough Dec '25 - June '26, but ever since August I've had more interview requests in my inbox than I can remember in my 10+ year career.

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Something tells me not all of that debt is going to turn out quite as high quality as it appeared at the time of issuance.

The mere success of “AI” won’t be sufficient to repay those loans. Many of them only make sense in a world where AI is wildly transformative and profitably successful.

And it is bleeding over into equities as well. Between the SPCX and Anthropic IPO, and META approving an ATM offering, feels like we are seeing a really big strain on liquidity across the board.

Maybe a naive perspective but I honestly would have thought that a larger credit market on high quality debt would actually enable a larger credit market on low quality debt. In other words the former would effectively expand money supply more reliably and therefore enable creditors to also support more speculative bets. Admittedly if there are higher ROI speculative bets to go after then maybe those just get pushed down the priority line. But I'm surprised that they're in direct competition with the high quality stuff exactly.

Yes. And bear in mind than default create inflation naturally. When it's productive companies that default, the effect is increased. If PE can't roll their debt, i fear it will increase the dollar inflation really fast, which will have second order effect.

Also since idiots predicted hyperinflation 5-4 years ago and other idiots believed them, we're still before the 'bust' of precious metal prices (We're at the point where people invest in opening new gold/silver mines), which means it will be harded to edge against inflation than it used to be.

What's your opinion on Oracle's debt?

PE has a glut of 32,000 companies ($4T in equity) they can't sell and the average hold time is extended past 8 years.

https://www.notveryprivateequity.com/eight-year-hold/ https://www.pennmutualam.com/market-insights/blogs/chart-of-...

Indeed.

The End of Private Equity’s Leveraged Buyout Era Is Nigh - https://www.bloomberg.com/opinion/articles/2026-09-30/the-en... | https://archive.today/B1EfY - September 30th, 2026

Blackstone’s Private Equity Chief Joe Baratta Leaving Firm - https://www.bloomberg.com/news/articles/2026-09-25/blackston... | https://archive.today/ZH2so - September 25th, 2026

https://news.ycombinator.com/item?id=47049024 (citations)

Why not accept the write downs and say you're pivoting to AI? The can can't be kicked down the road forever...

So traditional Venture firms are not part of this (1). VC buys equity in their start-ups, not debt, so interest rates aren't a direct concern of theirs. And VC firms generally do not borrow, they raise investment funds of investors money and because it is high risk, generally speaking no one lends money to these funds.

Private Equity firms on the other hand do generally take on a lot of debt- they have their own money but they borrow even more (2) and use that amount of money to buy out the current owners of a company. Basically they borrow to turn a steady stream of revenue into the future (an existing software company that is profitable) into a big pile of cash today for the current owners. And then they need to pay off that borrowing over time, from the steady stream of revenue that the software company generates. And if they are wrong about the size of the steady stream of revenue, they basically declare bankruptcy and the people who loaned the money (banks but also pension firms etc.) now run the company.

1: The way that VC changes is that the rising interest rates mean that the returns to safe investments are higher, so in order to attract new capital VC firms have to promise even higher returns as well.

2: They borrow money to get higher returns- if you have 5 dollars in a stock and it goes up 20% you have 6 dollars. If you have 5 dollars and borrow 5 dollars and invest it in a stock that goes up 20% you have 7 dollars after you pay back the loan. The catch is, if the stock instead goes down by 20%, after you pay back the loan you only have 3 dollars. (And if the stock goes down 50% you are wiped out.) But PE firms are confident that their investments will always be winners, so they take out loans like that.

There is some variety, but a very common model in Private Equity is to acquire an asset (a company), and fund that acquisition through either equity or debt.

The ability to purchase often comes in through either Private fund investments or via Debt.

* Private funds are most often drawdown funds (Private equity funds, VC Funds, Real Estate Funds, etc.). These are managed funds not available on public markets, typically require a substantial commitment of funds, and generally in return these investors can expect a significant return on their capital.

* Debt was a very popular way to finance these purchases as well when interests rate were lower, and you expect to sell the asset/company before the debt comes due. Basically cheap money made this feasible/possible.

The expectations are typically 5-10 years for both of these funding models; with private funds, they expect to run for X years, long enough to acquire the assets, clean them up, and resell them at a profit. For debt, the expectation was to sell before the debt came due, along the same timeline.

So that's the backdrop.

The primary concern here is around investments in tech and SaaS companies impacting both models. SaaS has contracted quite a bit with pressure from AI and valuations are lower.

The article is focused on the debt financed path; PE hasn't been able to sell companies as quickly as they would like or at a price they would like, so they are sitting on the books. And for companies purchased using a combination or private funds, they have companies they can't unload for the price they would like. The funds that are in this state where they cannot sell remaining portfolio companies without realizing losses are called zombie funds.

Their debt comes due. Most likely they get debt from a different bank or private credit firm to pay down the old debt.

Those who can’t refinance will sell assets or the business.

pass it off to some unsuspecting schmuck

Which in some cases means the general public via IPO.

I think we’re about to find out real quick who is actually good at business and who was just shuffling cheap leveraged money around trying to look important and smart.

Sounds like a prescient proxy for AI vs humans.

Fair question. They would put the money somewhere else. Doesn't mean they would get similar returns, but in this case they aint getting the returns they thought anyways. All that matters is entry point and exit point, right now they are going to be using the wrong exit point

PE actually consistently underperforms, pensions would be better off in a public index fund.