High Yield And Leveraged Loans: Assessing AI's Impact On A Risk-Return Continuum
Summarize this article with:
Neuberger Berman3.24K FollowersFollow5ShareSavePlay(16min)CommentsSummaryThe surge of investment-grade AI infrastructure debt has mesmerized fixed income investors, but the non-investment-grade market has seen its share of the action.Forecasts point to as much as $150 billion of additional non-investment-grade AI issuance over the next five years.Our bottom-up analysis has determined that the prospects of companies within each industry may fall along a continuum, depending on competitive position and effectiveness in introducing AI to the business. BlackJack3D/E+ via Getty Images By Rachel Young The rapid adoption of artificial intelligence by businesses makes its impact a critical consideration in assessing the risk and return potential of lower-rated credits. The surge of investment-grade AI infrastructure debt hasThis article was written byNeuberger Berman3.24K FollowersFollowNeuberger Berman was founded in 1939 to do one thing: deliver compelling investment results for our clients over the long term. This remains our singular purpose today, driven by a culture rooted in deep fundamental research, the pursuit of investment insight and continuous innovation on behalf of clients, and facilitated by the free exchange of ideas across the organization. From offices in 39 cities across 26 countries, Neuberger Berman manages a range of equity, fixed income, private equity and hedge fund strategies on behalf of institutions, advisors and individual investors worldwide. With 763 investment professionals and 2,850 employees in total, Neuberger Berman has built a diverse team of individuals united in their commitment to client outcomes and investment excellence. Our culture has afforded us enviable retention rates among our senior investment staff, and has earned us citations as first or second (among those with 1,000 or more employees) in the Pensions & Investments “Best Places to Work in Money Management” survey each year since 2014. As a private, independent, employee-owned investment manager, Neuberger Berman is structurally aligned with the long-term interests of our clients. We have no external parent or public shareholders to serve, nor other lines of business to distract us from our core mission. And with our employees and their families invested alongside our clients—plus 100% of employee deferred cash compensation directly linked to team and firm strategies—we are truly in this together. The firm has $538 billion in assets under management as of June 30, 2025. For more information, please visit our website at www.nb.com.For important disclosures: https://www.nb.com/disclosure-global-communicationsQuick InsightsHow is AI impacting sector risk profiles in non-investment-grade credit?AI is creating sector dispersion: software faces disruption and margin pressure, while hardware, semiconductors, health care, and utilities stand to benefit from AI-driven demand and efficiencies.What are the key criteria for identifying resilient issuers amid AI disruption?Issuers with scale, entrenched competitive moats, advanced AI integration, and strong management execution are best positioned to navigate AI-driven shifts and outperform in the non-investment-grade space.How should investors approach security selection in AI-exposed high-yield markets?A bottom-up approach is essential, focusing on company-specific AI strategies, sector positioning, and operational execution to capture opportunities and mitigate risks from AI-driven market turbulence.Recommended For You