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Weekly Market Summary
Aug 10 to Aug 14, 2026
Extra Credit*
• AI disruption fears are driving a growing divide within software credit. Application software, with $147 billion of leveraged loans outstanding, has underperformed infrastructure, data, and cybersecurity credits by a wide margin. While refinancing and extension options remain open for the $32 billion maturing through 2028, recent deals show that borrowers are paying for that access through wider spreads and steeper discounts.
• Application software continues to bear the brunt of the software-sector selloff. Its average loan bid fell to 87.75 as of July 28, down 9% year to date and near its late-June low, while infrastructure, data, and cybersecurity software loans declined a more moderate 6% to 91.25. Because application software represents roughly three-quarters of indexed software loans, its widening three- to four-point discount to the rest of the sector has become a major driver of broader software-credit weakness. The category includes large borrowers such as UKG, Dayforce, and BMC Software.
• Software’s former dominance in the leveraged loan market has created a sizable refinancing challenge. Application software borrowers now have $147 billion of loans outstanding, or roughly 10% of the asset class, with 57% rated B-minus or below. As AI disruption threatens growth and pricing power, the sector faces a substantial maturity wall: $32 billion comes due through 2028, followed by another $19.3 billion in 2029.
Source: PitchBook LCD
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Morningstar LSTA US leveraged Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
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