There are no signs of relief from the AI impact as traders rush to sell off software industry debt exposure

Leverage loan traders are significantly reducing their exposure to debt in the software industry, with many loans trading near or at face value in early 2026. This indicates that market concerns about artificial intelligence are spreading within the credit market.

Media reports, citing sources familiar with the transactions who requested anonymity due to lack of public disclosure, say that syndicated loans for software companies such as Avalara Inc., Citrix, Dayforce, and Proofpoint have fallen by 1 to 3 points in the secondary market from last Friday to Tuesday this week. These loans were valued close to par (about 100 cents on the dollar) as of December 31 last year.

The latest catalyst for the global “AI panic” trading sweeping the markets this year is Anthropic expanding its Claude chatbot application to automate tasks in human resources, investment banking, and design.

The $5.5 billion loan for human resources software platform Dayforce dropped 1 point to 92.75 cents on Tuesday. The $2.5 billion loan for tax software provider Avalara fell 2 points, with the bid price dropping to 94.75 cents.

Previously, these debts, which were used to finance private equity-backed acquisitions through billions of dollars of borrowing, are now becoming prime targets for sell-offs. In the Bloomberg US Leveraged Loan Index, many of the worst-performing companies are tech firms, some of which have already fallen into “distressed debt” territory.

Kevin Foley, head of global markets at J.P. Morgan, said:

Things once seen as purely growth tailwinds are now becoming potential disruptors, and the market is becoming more selective. AI will be around for the long term, and we are still learning how it will change our lives—personally and professionally—but it will create new opportunities. This doesn’t mean new software products won’t emerge, but it does change the way the industry operates.

At an online event on Tuesday, Anthropic announced the latest developments with its partner companies. Anthropic also said it will allow enterprise clients to customize plugins to meet their organizational standards. A large portion of Anthropic’s new products are aimed at the financial industry, including plugins designed specifically for financial analysis, equity research, private equity, and wealth management.

The sell-off of software loans has spread to broader US credit risk indicators. On Tuesday, these indicators rose to their worst levels since November last year. When credit risk increases, the Markit CDX North America Investment Grade Index, which tends to rise in such conditions, widened by 1.38 basis points to 53.82 basis points. Similar indices measuring high-yield market risk fell to 107.21.

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