【AI+Software】Morgan Stanley: AI Disrupts Software Industry; Private Credit Default Rates May Rise to 8%

SocialAnxietyStaker

2026-03-17 05:31:24

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Morgan Stanley warns that as artificial intelligence (AI) technology continues to disrupt the software industry, default rates in the private credit market could rise to 8%. In a report released on Monday (16th), Morgan analysts including Joyce Jiang stated that although the disruptive impact of AI has not yet had a “material” effect on the fundamentals of private credit, the software sector faces risks from high leverage and maturing debt, which could push default rates to levels not seen since the pandemic.

“Credit fundamentals for software loans are under pressure, with the highest leverage and lowest coverage among major industries worldwide,” said the strategist. While public and private loan markets across key industries are affected, the ongoing AI disruptive transformation is expected to further increase default rates.

In recent months, the global credit market has experienced severe sell-offs and asset redemptions as investors assess how AI will disrupt revenue streams for software companies. Over the past decade, alternative asset managers like Blue Owl have heavily invested in software firms, attracted by their predictable profit curves and higher profit margins.

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