JPMorgan warns: Up to $150 billion in leveraged loans in US CLOs face AI risks

According to Cailian Press APP, JPMorgan Chase stated that between $40 billion and $150 billion of leveraged loans packaged into U.S. collateralized loan obligations (CLOs) could be impacted by the AI boom. The Wall Street bank pointed out that this is because these loans are concentrated in industries most closely associated with AI risks. The estimate was released during a review of the SFVegas 2026 conference, where the impact of software on corporate CLOs became the “hottest topic of the day.”

CLOs provide investors with exposure to floating-rate debt rather than fixed-rate corporate bonds. They operate by bundling leveraged loans into products with varying risk and return levels, similar to bonds, then selling them to investors. Recently, after Anthropic PBC released its powerful Claude chatbot and triggered a significant sell-off of software-related loans, CLO managers have been scrutinizing their portfolios to identify which loans are most vulnerable to AI impacts.

In a report released Thursday, strategists led by Rishad Ahluwalia wrote: “AI doomsday? That seems a bit exaggerated. While focusing on the software industry is reasonable, we have told investors that what we consider more important (though still difficult to quantify at present) is to consider the broader impact of AI disruption on CLO credit risk.”

To arrive at the $40 billion to $150 billion estimate range, strategists used a simplified screening method based on market prices and rating information to assess AI credit risk in CLOs. However, they also acknowledged that this approach still requires further refinement and improvement, citing the healthcare industry as an example where proprietary data issues and complex regulatory environments make it difficult to provide clearer judgments to investors.

The strategists also emphasized concerns about refinancing risk, noting that approximately $51 billion of software-related debt rated B- or lower will mature in 2028, with another roughly $50 billion due in 2029. They wrote: “The large exposure of private credit to the software industry indicates that the private market’s ability to refinance syndicated loan assets is limited, which differs from the past when public markets more frequently transferred deals to private markets.”

The strategists stated that during the conference, attendees also worried that if the labor market weakens or anxiety around AI triggers broader sell-offs, price risks could emerge. They said: “To be fair, our economists expect the diffusion of AI in the economy to be more gradual. However, the leverage of AI in financial markets also carries the risk of disappointing resets in expectations, and our cautious outlook for 2026 CLOs reflects this theme.”