Weekly Market Summary

Extra Credit^*

• Software is the largest sector in the broadly syndicated loan (“BSL”) market, representing about 13% of the $1.53 trillion index, or roughly $195 billion outstanding. Rapid growth between 2020 and 2025 fueled by PE-backed M&A and ultra-low rates made software a major contributor to the overall expansion of leveraged loans. As a result, price weakness in software credits now has an outsized impact on broader loan market performance. Roughly half of outstanding software loans, nearly $100 billion, are rated B-minus, with another 10% in CCCs, far exceeding index averages. The sector also carries a slightly heavier near-term maturity wall, increasing refinancing risk if capital markets remain closed. With February seeing no new software loan launches, access to syndicated refinancing has effectively stalled.
• Until sentiment deteriorated in recent weeks, software borrowers had broad access to refinancing in the broadly syndicated loan market. In 2025, the sector raised $32.1 billion to refinance existing debt, accounting for 17% of all BSL refinancing activity and slightly exceeding its share of the overall market, a sign of still-receptive conditions. That window has now effectively closed, with no new software loan launches in February across any use of proceeds.
• Total leveraged loan issuance to software companies reached $79.1 billion last year across refinancings, dividend recapitalizations, M&A, and other uses of proceeds (excluding repricings and maturity extensions). While issuance declined 7% from 2024, it still marked the third-strongest year on record. Notably, the credit quality mix improved relative to the ultra-low-rate era, with B-minus rated borrowers accounting for just 31% of issuance, down from roughly 50% during the 2019–2022 period.

Morningstar as of 2/9/2026.