Feb. 4 at 9:37 PM
PickAlpha Midday:
A selloff in software leveraged loans has pushed
$17.7B of US tech loans into distressed trading levels over the past four weeks, taking the total tech distressed debt pile to about
$46.9B. In this context, “distressed” means loans trading at yields >10pp over SOFR — a sign credit markets are rapidly repricing AI-disruption risk in SaaS.
Tickers:
$IGV $BKLN $BIZD
Our view is this is a credit canary for software: when loans go distressed, refinancing optionality disappears and the equity multiple usually follows. If the distressed pile keeps expanding beyond ~
$46.9B in the next few weeks, expect another leg of de-risking across SaaS + private-credit wrappers; if it plateaus and stops widening, this becomes a tradable “fear spike” rather than a solvency cascade.
