🦔The pile of US corporate loans trading at 80 cents on the dollar or less hit $139.8 billion, according to JPMorgan. That's up nearly 90% in a year and just $4 billion short of the May 2020 peak. Tech makes up the biggest slice at 39%, led by software makers like CDK Global, the company that runs the back-office systems at thousands of car dealerships. My Take These are leveraged loans, which mostly go to companies already carrying a lot of debt, usually after a private equity buyout. When one trades at 80 cents, the people holding it doubt they'll get paid back in full. Software companies were the favorite buyout target for years because subscription revenue looked steady and safe to borrow against. Now AI threatens to do a lot of what that software does, and more than $100 billion of software debt comes due soon. Lenders have to decide whether to roll it over at today's rates for a business that might shrink. Stocks are near record highs anyway. Meanwhile the riskiest tier of these loans, the white line on the chart, lost money this year while everything rated higher went up. I think more of these companies hand the keys to their lenders next year, and JPMorgan already expects loan defaults to climb to 4.5% in 2027 from about 2.25% this year. Loans like these live inside loan funds and private credit funds that Wall Street now sells to regular investors. If you own a floating rate or private credit fund, find out what's in it. Hedgie🤗