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M Stanley: AI to Deal Blow to Software Industry; Direct Loan Default Rate May Hike to 8%
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In Morgan Stanley's view, the disruptive impact of AI has not yet had a material effect on the fundamentals of private credit. However, the elevated leverage and looming maturity walls could push default rates to levels not seen since the pandemic. It is anticipated that the default rate for direct loans will climb to 8%. Morgan Stanley noted that the credit fundamentals of software loans are challenged with the highest leverage and the lowest coverage ratios across major sectors. Although defaults on public and private loans have previously slowed, the emergence of AI's disruptive effects is expected to further increase default rates. AASTOCKS Financial News Website: www.aastocks.com |
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