LONDON, April 24 (Reuters) - Private equity firm Thoma Bravo confirmed this week it is nearing a deal to hand software firm Medallia to its lenders after months of restructuring negotiations.

The development, reported exclusively by Reuters, has implications for both private equity firms that own software services firms and for creditors who have financed their debt, as the industry grapples with the threat of artificial intelligence upending such businesses.

In this instance, the restructuring would transfer control to creditors, including Blackstone BX.N, KKR KKR.N, Apollo Global APO and Antares Capital, which hold $3 billion in Medallia debt, wiping out $5.1 billion in equity for Thoma Bravo and co-investors who bought the company for $6.4 billion in 2021.

The restructuring marks private credit's most severe stress test since the sector's rapid expansion, with business development companies (BDCs) facing redemptions and now trading at their deepest discounts to net asset values in more than 5.5 years.

The median price-to-forward 12-month net asset value (NAV) ratio stood at about 0.74 at end-March, implying a roughly 26% discount, the widest since October 2020.

Developments this week showed pressures on the sector remain as listed BDCs report earnings over the coming month.

Blackstone's flagship private credit fund, BCRED, for example, was hit with a surge in withdrawals adding up to a bigger-than-usual $3.7 billion in the first quarter, resulting in net outflows. Investors in the Barings Private Credit Corp fund sought to pull 11.3% of shares in the first quarter and the fund fulfilled roughly 44.3% of repurchase requests from each shareholder, as per its filing with the U.S. Securities and Exchange Commission.

Meanwhile, Apollo Debt Solutions reported a $700 million drop in aggregate NAV for March 2026, confirming valuation pressures.

In other news, money flows into a popular category of private credit funds for wealthy investors dropped by 45% ​in the first three months of this year from the ‌same period of 2025, according to data released on Wednesday by specialist investment bank RA Stanger.

Regional banks used strong first-quarter results to show investors something they have kept more opaque: how much they have lent into the shadow-banking system. Eight U.S. regional lenders disclosed more than $230 billion in loans to non-bank financial institutions, with PNC Financial, U.S. Bancorp and Truist Financial accounting for the bulk of the exposure.

Also, three of the six biggest U.S. lenders disclosed about $108 billion in financing exposure to private credit or related loans during their quarterly earnings.