JPMorgan Marks Down Software Loans Amid Fears of AI Disruption

JPMorgan marked down the value of loans to software companies in the portfolios of private credit lenders, the Financial Times reported Tuesday (March 10), citing unnamed sources.

Software companies are seen as vulnerable to the effects of artificial intelligence, according to the report.

JPMorgan’s move will limit the amount of credit available to firms that lend to these companies because these loans serve as collateral when the private credit lenders borrow from banks, the report said.

Reached by PYMNTS, JPMorgan declined to comment on the report.

Troy Rohrbaugh, co-CEO of JPMorgan’s commercial and investment bank, told analysts in February that the bank was becoming more conservative when it comes to private credit lenders, according to the FT report.

“As the world gets more volatile … this outcome should be expected,” Rohrbaugh said, per the report. “I’m shocked that people are shocked.”

It was reported in January that software companies are seeing their loan prices fall because investors are concerned that AI advances, such as the coding capabilities of Anthropic’s Claude model, will make many software offerings redundant.

Software is one of the biggest components of the leveraged loan market, accounting for 12% of the credit in the Bloomberg U.S. Leveraged Loan Index. As of Jan. 31, software debt in collateralized loan obligations, which are bonds backed by portfolios of leveraged loans, had notched the worst total returns this year versus all sectors, according to data compiled by Nomura.

PYMNTS reported in February that as of Feb. 4, more than $800 billion in market value had been wiped out of the enterprise technology sector after Wall Street analysts pointed to the disruptive potential of new enterprise AI tools from providers such as Anthropic, designed to automate processes like contract reviews and legal briefings.

At the same time, as private credit has expanded and become a fixture of modern capital markets, banks, regulators and investors are taking a closer look at the risks embedded within that lending class, PYMNTS reported March 5.

Questions are mounting about transparency and systemic exposure, particularly as large banks disclose new details about their lending relationships with nonbank financial institutions, according to the report.

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