March 11 (Reuters) – JPMorgan Chase has marked down the value of certain loans held by private-credit groups and is tightening its lending to the sector, the Financial Times reported on Wednesday, citing people familiar with the matter.
The markdowns apply to loans made to software companies, which JPMorgan views as particularly vulnerable to disruption from artificial intelligence, the report said.
Growing concerns about deteriorating credit quality, specifically regarding artificial intelligence-led disruption in the software sector, have triggered a wave of investor withdrawals from private credit vehicles, including BlackRock’s $26 billion HPS Corporate Lending Fund.
Private credit refers to loans issued by non-bank lenders, typically to riskier borrowers or companies funding large buyouts. While these loans can be arranged quickly and serve borrowers too risky for banks, rising concerns over credit quality and exposure to software firms vulnerable to AI disruption are clouding the fast-growing market.
Jamie Dimon, the bank’s chief executive officer, told investors last week that the lender was being more prudent in lending against software assets, the report said, citing two people briefed on the closed-door meetings.
The reductions will limit how much the bank is willing to lend to private credit groups against those loans.
Reuters could not immediately verify the report. JPMorgan did not immediately respond to a request for a comment.
The “AI scare trade” has triggered a massive value wipeout in U.S. software stocks and alternative asset managers, as rapid model upgrades and specialized tools from firms such as Anthropic spark fears of systemic disruption across labor-intensive sectors.
These disruption fears are driving up borrowing costs as tech firms retreat from debt markets and lender scrutiny increases, with analysts forecasting a 3% to 5% spike in tech loan defaults through 2027.
The private credit sector faces a liquidity test as Blue Owl, BlackRock, and Blackstone restrict withdrawals after a surge in redemptions.
(Reporting by Rajveer Singh Pardesi in Bengaluru; Editing by Rashmi Aich)
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