The report evaluates the leveraged loan market, noting solid carry but limited price upside due to AI-related software sector repricing and elevated default risks. Primary issuance remains robust, though credit fundamentals continue to face pressure.
Key Takeaways
- 1.Leveraged loan markets are showing divergence, with the Software sector repricing lower due to AI-related disruption risks.
- 2.US leveraged loan default rates remain elevated, with expectations for 3-4% over the next 12 months.
- 3.Primary market issuance recovered in May to USD 43bn, driven by improved sentiment.
Table of Contents
- Central scenario
- Upside scenario
- Downside scenario
- Appendix
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Authors
Antoine GeillerCarolina CorvalanFrederick MellorsLeslie Falconio
Securities
Morningstar LSTA US Leveraged Loan Index
Themes
AI Disruption in Software
Regions
GlobalEuropeUnited States