Why Lenders Are Changing the Rules
Over the last decade and a half, European software firms could take out loans and simply cover interest until maturity. No one asked them to chip away at the principal along the way.
That is starting to change.
Concerns over AI's potential to disrupt software businesses have prompted lenders to insist on repayment structures not observed in Europe since the 2008 financial crisis.
Lenders argue that AI's potential to disrupt software companies demands additional safeguards.
The Deals That Show the Trend
Paysafe Ltd is the clearest example. The payments firm, which counts Blackstone and CVC Capital Partners as backers, is trying to push its loan maturities from 2028 to 2030. To get that extra time, it is offering to repay 5% of the original loan amount every year.
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Paysafe has an $814 million US dollar loan and a €586 million euro loan. It is also offering a higher interest rate - 500 basis points above a benchmark. The transaction, arranged by JPMorgan, offers investors the possibility of recovering the full loan principal even though they only provide 95% of the funds.
The same pressure is hitting think-cell Software GmbH, a Berlin company that makes data-visualization tools for PowerPoint. Think-cell is owned by private-equity firm Cinven, and its debt matures in 2028. Some investors have informed Bloomberg that they would demand amortization should think-cell pursue an amend-and-extend arrangement for its €720 million loan, which now carries a 425-basis-point spread over Euribor. People familiar with the matter say Cinven has been repurchasing portions of the debt to reduce the company's leverage.
AutoForm, a supplier of software for carmakers backed by Carlyle, completed a debt deal in June 2026. It landed a €672 million term loan B and extended maturities by three years to 2032, but 30% of its investors were unwilling to extend.
Who Is Pushing and Why
The main force behind the change is a group of investors called collateralized loan obligations, or CLOs. CLO managers are getting nervous about artificial intelligence and want to tighten terms they agreed to during a period when borrowers had the upper hand.
Runway Growth Capital's founder and CEO David Spreng remarked, "If you have a software company that is highly profitable right now but your analysis shows you might be left vulnerable, then heck yeah you need to do what you can to get paid." Runway usually provides loans to technology and software companies that are pre-profit, and it structures amortization over the last three years of a five-year term.
In the US, amortization is more typical, with leveraged loan borrowers often making small annual principal payments of about 1%. More recently, US junk bonds have also included amortization as a sweetener for investors involved in AI data center financings.
Historically, European loan markets have favored bullet structures where borrowers pay only interest until maturity, unlike the US where nominal amortization is common. This difference is now narrowing as CLO managers, who hold significant portions of leveraged loans, reassess their exposure to software companies amid AI disruption.
This push for amortization reflects a broader reassessment of risk in the technology sector. During the low-interest-rate era, software companies enjoyed favorable borrowing terms due to their recurring revenue models and high margins. However, the rapid advancement of generative AI has introduced uncertainty about which software products will remain relevant. Lenders are now demanding more conservative structures to protect against potential disruption, mirroring practices seen in other industries facing technological upheaval.
The potential return of amortization in Europe hinges on market conditions.
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