AI-related debt is now over 15% of the U.S. investment grade bond universe and responsible for multiple $10+ billion private placements, and that’s not even taking into account associated sectors. Here’s where we see potential— and pitfalls—for fixed income portfolios.
The software sector is high yield private credit’s largest borrower by debt outstanding. As some software companies grapple with the specter of AI-driven obsolescence and slowing growth, it’s worth taking a closer look at your direct lending investments.
Despite recent bankruptcy headlines causing jitters in private credit markets, most corporate balance sheets remain healthy. But we need to talk about some of this messy lending.