FICC Focus Credit Crunch: GSAM’s McClain on High Yield Risks, Resilience
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Mar 30, 2026 John McClain, Goldman Sachs Asset Management’s global co-head of High Yield and Bank Loans, brings sharp expertise in high yield, leveraged loans and private credit. He breaks down market technicals, looming data-center and LBO supply, AI-related software credit risks, and where secondary market opportunities and secured project financing look most attractive.
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High Yield Is Now A Higher Quality Market
- High yield today is concentrated in higher-quality names with over 50% rated BB and yields in the low-7% range.
- That composition reduces default risk and makes the 3–5 year part of the curve attractive for harvesting yield given limited expected rate widening.
Loans Are A K Shaped Market From AI Disruption
- The loan market shows a K-shaped outcome driven by AI fears where BBs trade near par while B‑ and below credits slump.
- Result: loan spreads widened materially (around 800bp in the index) and loans currently sit ~200bp wide of bonds, creating selective opportunities.
Score Software Credits With An AI Threat Framework
- Use a structured AI threat scorecard to assess software credits across product type, proprietary data, vertical focus, contracts, R&D and balance-sheet metrics.
- Prioritize mission‑critical, multi‑product vendors with long contracts and durable proprietary data.