Artificial intelligence is moving faster than many expected, and it could soon rattle credit markets, according to UBS analyst Matthew Mish.
Mish said leveraged loans and private credit—worth $3.5 trillion combined—face a wave of potential defaults. He estimates $75 billion to $120 billion in new defaults could hit by the end of 2026. Companies most at risk include private equity-owned software and data services firms struggling to adapt to AI-driven disruption.
“The market didn’t anticipate this pace,” Mish told CNBC. “Investors now need to rethink how they evaluate credit under this rapid shift.”
Recent sell-offs in software stocks have already signaled the start of AI disruption. Mish warns that if adoption accelerates faster than expected, defaults could spike even higher, potentially triggering a broader credit crunch. Mish warns this could hit credit markets hard, forcing prices on leveraged loans to change and putting pressure on heavily borrowed companies. He splits firms into three groups: AI model creators like OpenAI and Anthropic, strong software companies like Salesforce and Adobe, and debt-heavy private equity-owned firms. The first two are positioned to benefit, while the last group faces the most risk.
No one knows exactly when or how big the impact will be, but Mish says the rapid spread of AI could shake not just tech companies, but the wider financial system. Investors and lenders may have to rethink how they manage risk as the landscape shifts.
Related Readings:
Source link
#UBS #Analyst #Warns #Shake #Credit #Markets #European #Financial #Review
