US Leveraged Loan Market Returns 0.93% in August as Software Sector Rebounds
The US syndicated loan market returned 0.93% in August, marking the second-best performance of the year and driven by a rebound in software sector loans. According to the Morningstar LSTA US Leveraged Loan Index, performing software loan prices rose significantly during the month, narrowing their YTD loss to -2.60%. This recovery helped close the gap between software returns and those of other sectors. The overall leveraged loan index gained 3.07% year-to-date in 2026, with strong contributions from IT services and containers & packaging sectors as well. Distressed paper now accounts for a smaller portion of the market at 11.18%, down slightly from July. The software sector's performance was particularly notable given earlier concerns about AI disruption that had slowed issuance and M&A activity. Investor demand outpaced supply, resulting in a $13.3 billion shortage during August. Software loans' recovery continued to be broad-based with seven of the top 10 contributors coming from this sector.
Topics: leveraged loans market returns software sector rebound