DISTRESS WATCH: AI Fears Push US Lev Loan Distress Over 10%

The AI-driven selloff intensified last week, pushing the distress ratio in the Bloomberg US Leveraged Loan Index above 10% for the first time in nearly three years.

The amount of troubled debt in the index surged to $144.4 billion as of Feb. 28, up from $118.1 billion at the end of January. That’s the highest month-end reading since May 2023, according to Bloomberg Intelligence data.

Sectors most exposed to potential disruption from AI advancements led the deterioration. Distress in technology jumped to 22% at the end of February from 14.7% a month earlier, while communications rose to 17% from ...