Traders Rush to Sell Software Company Loans That Were Near Par at the Beginning of the Year

Leverage loan traders are significantly reducing their exposure to software company loans — many of which, heading into 2026, remain priced near or at par — highlighting how concerns over artificial intelligence (AI) are rippling across the market.

According to people familiar with the trades, syndicated loans of software companies such as Avalara Inc., Citrix, Dayforce Inc., and Proofpoint declined by 1 to 3 points in the secondary market from last Friday through Tuesday. As of December 31, these loans were quoted near 100 cents on the dollar.

Anthropic has expanded the application scope of its Claude chatbot to automate tasks in human resources, investment banking, and design sectors, becoming the latest catalyst for the “AI panic” trade that has swept global markets this year.

People familiar with the trades said that Dayforce's $5.5 billion loan for its HR software platform fell by 1 point to 92.75 cents on Tuesday. The same sources noted that tax software provider Avalara's $2.5 billion loan dropped 2 points, with bids at 94.75 cents.

Software companies have previously raised billions of dollars in loans to finance private equity-driven acquisitions, and now these debts have become a focal point for traders. Many of the worst performers in the Bloomberg U.S. Leveraged Loan Index are tech companies, some of which have fallen to distressed levels.

The sell-off in software company loans is also impacting indicators reflecting expectations of U.S. credit risk. These indicators hit their worst levels since November on Tuesday before rebounding as the stock market opened higher.

Editor: Li Tong