Iran War, Software Disruption Emerge as Twin Risks for U.S. Credit
The U.S. risk outlook has deteriorated heading into 2Q26, with the U.S.-Iran war and AI-driven software disruption emerging as the two dominant credit themes, Fitch Ratings says.
In a prolonged war scenario, macroeconomic headwinds would be significant, driven by higher inflation, lower real wages, tighter financing conditions and broader demand weakness.
Fitch’s adverse scenario, which assumes oil prices average $100/barrel for 2026, implies U.S. gross domestic product (GDP) growth of 1.5% in 2026, roughly 0.7 percentage points below Fitch’s base case.
The maximum impact would be felt after four quarters, with growth falling to just 0.6% year-on-year in 4Q26, versus 1.8% in Fitch’s March Global Economic Outlook baseline.
Higher inflation would complicate the Federal Reserve’s rate path and delay expected rate cuts. Consumer-facing sectors, housing and airlines face the most acute second-order headwinds, while upstream energy and aerospace and defense could benefit.
Fitch said AI-driven software disruption has rapidly emerged as a parallel cross-sector concern, with implications spanning corporate credit, private markets and structured finance.
Also, Fitch sees this as a multi-year credit story. Near-term default rates remain contained, but refinancing risk is building as debt maturities for leveraged borrowers are concentrated in 2028-2031.
Redemption requests for U.S. perpetual non-traded BDCs rose 36% quarter-on-quarter in 1Q26, driven by investor concerns about software exposure and valuation uncertainty.
Stress transmission into BDCs and CLOs bears close monitoring, even if current cushions remain adequate. AI infrastructure investment continues to anchor private fixed investment and capital market activity, with strong issuance activity reflecting robust investor appetite.
