Software Debt Crashed from 94 to 87 Cents
Kenny Tang explains how AI disruption triggered the HALO trade and shattered software debt assumptions in early 2026.
Why Nobody Defaults Anymore (w/ Kenny Tang, PitchBook)
With Devin Mathews, Kenny Tang · Wednesday, November 4, 2026
Devin Mathews interviews Kenny Tang, Head of U.S. Credit Research at PitchBook, exploring the structural mechanics, evolution, and emerging stress points across the private debt and broadly syndicated loan markets. They break down essential credit concepts including cov-lite structures, PIK interest, and liability management transactions while analyzing why headline default rates remain below 1% despite severe price discounts and mounting portfolio stress. Tang outlines the impact of the 2026 AI software shock, the rise of out-of-court restructurings, and what credit LPs must scrutinize in underlying borrower financials.
Key takeaways
- Enterprise software debt was historically treated as top-tier collateral because sponsors could quickly slash SG&A and R&D budgets to cover debt service during downturns. Read more →
- Roughly 92% of broadly syndicated loans now lack financial maintenance covenants, stripping lenders of early intervention rights when borrower performance degrades. Read more →
- The headline default rate in the broadly syndicated loan market sits at just 0.87%, masking widespread balance sheet distress. Read more →
3 articles from this episode
Kenny Tang on Cov-Lite Debt and PIK Toggles
PitchBook's Kenny Tang explains why 92% cov-lite loan penetration and PIK toggles keep headline default rates below 1% while debt piles up.
Why Stressed Leveraged Loans Trade Below Par Without Defaulting
Headline default rates sit below 1% while 12% of loans trade under 90 cents. PitchBook's Kenny Tang explains the cov-lite debt reality.
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