Software companies are postponing debt deals as rising borrowing costs and stricter lender scrutiny weigh on the sector.
Mounting concerns that artificial intelligence could disrupt core business models have unsettled investors, widening loan spreads and increasing default risk expectations.
UBS estimates U.S. tech leveraged-loan defaults could rise to 3%–5% under faster AI disruption, above market forecasts of 1%–2%.
Even higher-quality issuers are delaying market access, waiting for trading levels to stabilize before launching new financing.
The market is closely watching a planned $5.3 billion acquisition financing for Qualtrics, seen as a key test of investor appetite.
Technology borrowers account for 17% of the $260 billion U.S. leveraged loan market, with software making up the majority exposure.
Half of software loans carry “B- or lower” ratings, signaling elevated refinancing and default risk, particularly into 2026 and 2027.
Banks are demanding higher yields and stricter covenants, reflecting heightened caution as AI disruption risk reshapes credit markets.
