U.S. Leveraged Loans Below 60 Cents Total $65 Billion

U.S. leveraged loans trading below 60 cents on the dollar totaled $65 billion, up from $40 billion a year earlier, signaling strain among some corporate borrowers even as the payment default rate was low.

The broader pool of loans priced at or below 80 cents totaled $139.8 billion. Technology companies accounted for about $54.4 billion, or 39%, of that amount.

These price thresholds reflect investors’ assessment of repayment risk, but they do not mean every borrower in the categories has defaulted. Deeply distressed loans trade below 60 cents on the dollar; the broader distressed category includes loans at or below 80 cents.

The payment default rate was 0.93% by principal amount for the 12 months through July. The measure counts missed principal or interest payments and excludes some out-of-court restructurings. A separate July measure that included liability management exercises was 2.87% by issuer count.

Technology borrowers have faced refinancing challenges and investor concerns about artificial intelligence’s potential effects on software companies. The available figures do not quantify how much either factor contributed to the loan distress.