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Weekly Market Summary
Feb 2 to Feb 6, 2026
Extra Credit*
- US leveraged loans fell 0.31% in January, marking the worst January in a decade, as a late-month selloff erased early gains. Losses were heavily concentrated in technology, particularly Software, which dropped 2.97% amid concerns around AI disruption, elevated leverage, and weakening earnings outlooks. Credit performance reflected a clear risk-off tone, with CCC loans sharply underperforming while BBs held up modestly.
- Market technicals favored borrowers despite uneven investor demand. Elevated repayments driven by M&A and takeouts limited index growth and skewed supply-demand dynamics in borrowers’ favor. As a result, new-issue spreads compressed to cycle and post-GFC lows in parts of the market, even as secondary prices weakened and the share of loans trading below par rose sharply. Investor appetite deteriorated across credit tiers, with a steep drop in loans priced at or above par and a rise in distressed pricing.
- Primary market activity surged, but opportunity varied significantly by sector. January primary issuance hit a six-month high, led by a wave of repricings and a rebound in M&A-related financing. Technology borrowers saw constrained access amid weak demand, while non-tech sectors such as Oil & Gas and Transportation capitalized on the open repricing window. Overall, the market showed a disconnect between robust primary issuance and fragile secondary sentiment.
Morningstar as of 2/3/2026.
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 Credit Suisse Leverage 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.
Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.
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