Traders are rushing to sell software company loans that are still trading near par value at the beginning of the year.

Leveraged loan traders are significantly reducing their exposure to software company loans - many of which are still trading close to or at par value by 2026 - showing how concerns about artificial intelligence are affecting the entire market. According to Bloomberg, loans for software companies like Avalara Inc., Cerner, Dayforce Inc., and Proofpoint have dropped 1-3 points in the secondary market from last Friday to this Tuesday. As of December 31st, these loans were quoted around 100 cents on the dollar. Dayforce's $5.5 billion loan dropped 1 point to 92.75 cents on Tuesday, while Avalara's $2.5 billion loan dropped 2 points to a bid of 94.75 cents. The selling of software company loans is affecting indicators reflecting expectations of US credit risk. These indicators touched their lowest levels since November on Tuesday, before rebounding somewhat after the stock market opened high.