California Public Employees’ Retirement System remains confident in its private credit exposure despite rising concerns over artificial intelligence’s potential disruption to software borrowers, according to a Bloomberg report.

The $615bn pension allocates roughly 4% of assets to private debt, with an 8% long-term target.

“We believe the book is diversified enough,” Chief Executive Marcie Frost told Bloomberg Television. “The team is really not too concerned about the software exposure that we’re hearing a lot about.”

The broader $1.8tn private credit market has experienced volatility amid fears that advances in AI could weaken software companies’ business models. UBS analysts recently estimated default rates could climb as high as 15%, compared with current levels between 3% and 5%.

Calpers’ private debt commitments include $3bn to Blackstone Real Estate Debt Strategies V, $2.3bn to an Ares Senior Direct Lending Fund III, and $2.1bn across three Blue Owl Capital funds.

Frost added that the pension had not been directly approached to acquire loans from private credit managers, although she said, “We will always take a phone call.”

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