AI & software disruption: impact on credit markets

May 19, 2026

Our Leveraged Finance team members look at how a recent period of dislocation may create a relative value opportunity within US HY bonds, particularly when viewed against other leveraged finance markets.

Key takeaways:

  • Software in the crosshairs: the technology sector – specifically software – sat at the centre of a repricing across fixed income in Q1, as concerns around structural obsolescence took hold. The greatest impact was felt in leveraged credit markets where software comprises a disproportionate share of portfolios.
  • Repricing creates opportunity: this period of dislocation may create a relative value opportunity within US HY bonds against other leveraged finance markets. Lower exposure to software risk, improved structural quality, and strong technical demand positions US HY as a resilient and attractive segment of credit in an AI-driven market environment.
  • A more liquid alternative: for investors seeking yield without concentration risk, the asset class offers a compelling solution – attractive all-in returns, genuine liquidity, and a backstop against software sector dislocations.

Read our full piece here