Leveraged loan distress hits its highest level since the pandemic

The riskiest corner of the US corporate loan market is flashing its brightest warning light since March 2020. According to a JPMorgan Chase & Co. report dated October 6, 2026, deeply distressed leveraged loans now total $65 billion. Technology, and software in particular, is doing most of the bleeding. A quick primer: leveraged loans are loans made to companies that already carry heavy debt loads. They tend to get packaged, traded and held by funds hungry for yield. When their prices sink well below face value, the market is betting that some borrowers will struggle to pay. The numbers behind the stress JPMorgan sorts the trouble into two tiers. The first is the “deeply distressed” bucket, meaning loans trading below 60 cents on the dollar. That category reached $65 billion as of October 6, up from $40 billion a year earlier. The second tier is wider. Loans trading at or below 80 cents on the dollar, the broader distressed category, hit $139.8 billion. That represents a nearly 90% jump year over year. It also puts the figure close to the peak recorded in May 2020, when the global economy had effectively been switched off. Why software is in the crosshairs Technology companies a...