Know More. Risk Better. BSL Divided: AI Overhang vs. Flight to Quality
Jul 23, 2026
Kerry Kantin, U.S. bureau chief for LevFin Insights and leveraged finance analyst, discusses the rebound in loan issuance and a growing split between higher- and lower-quality credits. She covers AI-related uncertainty hitting software, rising AI infrastructure and data-center financings, repricing mechanics and floors, and how private credit and CLO dynamics are reshaping the loan market.
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Technical Rebound Drove Q2 Loan Recovery
- The loan market rebound in Q2 was technically driven as investors learned to navigate geopolitical volatility and put cash to work.
- Kerry Kantin notes opportunistic issuance produced borrower-friendly terms despite lingering AI and macro questions.
Index Masks Deep Bifurcation In Loan Prices
- Aggregate index prices mask a sharp bifurcation between higher-quality performing loans and underperforming credits like software.
- Kantin highlights double Bs are near year-end levels while distress exceeds 9%, skewing averages.
Primary Market Shows Flight To Quality
- Primary issuance shows a clear flight to quality with B3 issuance falling to ~12% of volume as higher-rated borrowers and repricings dominated.
- Kerry attributes the drop to sidelined software names and heavy bank demand for BB paper.