JPMorgan Global Leveraged Finance Conference Wrap: SaaS Stress From AI Disruption; Iran Conflict Pauses Dealmaking Activity

Leveraged finance participants from across the world descended upon Miami this week for JPMorgan’s Global Leveraged Finance Conference to discuss market dynamics at play, including the threat of AI and geopolitical risks, both of which are rapidly impacting dealmaking.

A pipeline of new leveraged finance deals were expected to be discussed at the highly anticipated conference, but several were paused because of news breaking over the weekend of the Iran war. This, along with ongoing market volatility from AI’s impact on the software sector, were on top of mind for market participants throughout the week.

Multiple primary leveraged loan and high-yield bond deal processes have been put on the sidelines given the current volatility from geopolitical factors, market participants said. Many participants are in a wait-and-see mode as investors and dealmakers assess the fallout, similar to how the market is reacting to the AI-driven software selloff.

In one instance, about 70% of leveraged finance deals led by a major advisor were paused after the start of the conflict in Iran, according to a conference attendee. Appetite for deals was already tepid because of concerns around sectors with AI exposure, in particular software, they added. Software now represents the largest sector share for distressed companies, at about 30%, according to an investor outlook panel at JPMorgan’s conference.

Investors and bankers are still assessing the reverberations of AI-related uncertainty on dealmaking this year, but some are worried that the pullback in activity could mirror last year’s tariff tumble, which froze the leveraged finance market for roughly a month, according to attendees.

While these recent factors were on everyone’s mind, including JPMorgan CEO and Chairman Jamie Dimon, market participants at the bank’s conference pushed ahead in assessing how current conditions are shaping future dealmaking.

Another dynamic leveraged finance participants discussed was the large amount of M&A and LBO supply coming to the primary market this month, such as the JPMorgan-led deals for Electronic Arts, Qualtrics and Sealed Air, among others.

In particular, one panelist at the conference said there will be technical headwinds for certain deals that are negatively impacted by AI, given how much has changed in the market the past few months. For buy-siders, it is “an opportunity if you continue to do the credit work,” the panelist said.

Attendees also pointed to a highly anticipated debt financing package to support the recent Warner Bros. Discovery acquisition by Paramount SkyDance for $110 billion, which was finalized last week.

Looking ahead at mega M&A and LBO deal creation, the same panelist said leveraged finance dealmakers are already thinking about what the new cost of capital is for software companies. Specifically, there are questions around whether software borrowers will be able to pivot their business models to impede the impact of AI and be able to access the primary market, which some buy-siders are wary of at the moment, the panelist added.

As investors and advisors recalibrate their 2026 expectations, JPMorgan’s bankers projected strong fundamentals for the leveraged finance market, attendees at the conference noted.

The market for leveraged loans and high-yield bonds is expected to grow by $70 billion this year, according to sources in attendance, and the syndicated market is expected to take back share from the private credit market. Both sides of the leveraged finance market are expected to grow, however, as a result of the M&A cycle.

Pricing on deals is expected to remain tight: Bankers noted that the average spread over SOFR is below 400 bps and is expected to remain there for the next 12 or even 24 months.

Despite the growing threat of AI mixed with the current Iran war dynamics impacting leveraged finance issuance, market participants noted that the market is moving full steam ahead with finalizing deals in the pipeline.

One such deal expected to launch imminently is Electronic Arts’ multi-billion-dollar loan and bond offering, which was one of the most topical names at the conference this week. After investors reanalyzed the credit amid the AI panic, as reported, leveraged finance participants noted that the deal should reveal how much risk appetite buy-siders have amid current market volatility.