What will the impact of AI be on the software sector?
The price of leveraged loans has been jumping around as the CLO market reckons with the question. But there’s enough cash coming in from subscription revenues that no one has to force the issue, yet.
That will have to change before 2028, when the bumper 2021 crop of loan issuance comes to maturity. The 2021 loans are not all software, and there is a lot of nuance, which Thomas Hopkins deftly covers here and on the podcast.
By 2028, the extent of AI’s impact on the software-as-a-service (SaaS) market should be clearer. Will it take all the king’s horses and all the king’s men to put the loans together again?
Endgame enters endgame
Meanwhile, George Smith was in New York last week to hand out some awards at GlobalCapital’s US Securitization Awards 2026. Find the winners here.
There was also time to attend FT Live’s US Risk Transfer event and take the temperature of the SRT market (or “CRT market”, as it is called by those who expect temperature readings in Fahrenheit).
The most important development for the market this year was a final proposal for Basel 3 Endgame, published by US financial regulators in March.
The race is on to get the rules finalised. Depending on who you ask, that could be before November’s midterm elections in the US, before the end of the year, or later. A consultation runs until June 18.
The proposal is seen as a good one for US banks and the securitization industry, and is certainly far better than the 2023 proposal that prompted scathing responses.
But there is a dilemma about how to respond to the consultation. It’s tempting to write back with a wish list pages long, but panellists at the CRT event urged sharp responses, targeting key changes.
Trade associations in Europe have taken that approach as the EU has embarked on its reform of the bloc’s securitization regulations, with comment letters targeting key issues such as the sanctions regime. But we won’t know how successful they have been until the trilogue negotiations are complete.
