The Refi Clock Is Ticking & AI Fear Hit The Loan Desk

Software equities have erased approximately $1.6 trillion in market value over a compressed period.

What was quieter was the loan market watching it happen.

Stocks can fall in a week. Credit adjusts when a deal needs to close. That moment is getting closer for a wave of sponsor-backed software names.

Secondary loan prices have slipped. 

That alone changes new issue math. Lenders don’t need panic to tighten terms. A few points off price, a stricter covenant, a lower add-back cap… that’s enough to reset structure.

Meanwhile, power timelines are stretching and permitting fights are dragging. That pushes AI-adjacent projects further out. When schedules move, cost of carry rises.

So now the tension sits here: valuations have reset. Documentation is next. And refinancing dates are fixed.

Translate equity damage into underwriting behavior. The real shift isn’t whether AI works. It’s whether lenders now assume less durability in software cash flows. 

That assumption shows up in floors, covenants, and equity checks before it ever shows up in default data. This is how credit tightens without a crisis. 

The handoff from narrative risk to structure risk is already happening.

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The signals below are not forecasts. They are mechanisms already in motion. Each one reveals the same pattern: duration is being financed before economics are fully proven.

Here’s the twist no one expected. 

Big Oil is asking Trump to ease up on offshore wind. 

Not because they love turbines. Because they need a permitting deal.

Oil wants pipelines protected in law. Democrats won’t negotiate while wind projects are stalled. That standoff jams the entire permitting rewrite. 

And without a rewrite, energy projects keep crawling through court fights and environmental reviews.

That delay hits more than wind. 

It slows gas lines. It slows transmission. It slows data center power hookups. AI demand can scream all it wants. If projects can’t clear permits, timelines stretch and carrying costs stack up.

The permitting standoff converts political friction into measurable schedule risk, extending build timelines and increasing carrying costs across energy and data infrastructure.

What matters now more than last week is time to approval. Political standoffs delay permits, which extends project timelines and raises carrying costs. Calendar slippage quietly erodes returns before fundamentals ever change.

Developers aren’t chasing shiny new towers right now. 

They’re buying older buildings at a discount and fixing them fast.

Bozzuto and Invesco just lined up $1 billion to do exactly that. 

Why? Because building from scratch means fighting city halls, zoning boards, and high construction costs. Buying an existing property means cash flow sooner.

Oversupply headlines scare people. But the bigger move is capital choosing control. Renovate. Reposition. Raise rents where it makes sense. Skip the multi-year entitlement maze.

Speed is now part of underwriting. A building that can be improved in months looks different from one that needs three years of approvals before the first shovel hits dirt.

Time is no longer free.

What used to work that won’t anymore is waiting on development optionality. Longer approval timelines compress IRRs and magnify carry risk. Assets with immediate execution paths are gaining structural preference.

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Everyone loves the nuclear story. 

Baseload power. AI demand. Energy independence. It sounds clean and strategic.

Then you look at Hinkley Point C. 

Costs nearly tripled. Startup pushed back years. Partners stepped away. The government had to step in heavier than planned.

This isn’t about whether nuclear is needed. 

It’s about who absorbs overruns when timelines slip and budgets swell. Steel gets more expensive. Designs change. Regulators add conditions. Every delay compounds.

Megaproject math is brutal. 

Long timelines plus cost creep can wipe out equity upside fast. You don’t see it in year one. You see it in year seven.

Ambition is easy. Funding the calendar is harder.

What illusion just broke is that strategic importance guarantees equity returns. Extended build timelines and regulatory revisions compound cost overruns. Duration risk, not demand, is becoming the primary variable in megaproject underwriting.

Software repriced abruptly rather than gradually. 

The drawdown was concentrated and fast, forcing a reset in assumptions about durability.

$1.6 trillion in market cap gone. 

Salesforce, Adobe, Workday… all repriced fast. Investors aren’t arguing about growth rates anymore. They’re asking a harder question: how durable are these cash flows if AI keeps improving every quarter?

For years, software was the “safe” leveraged bet. Recurring revenue. High margins. Low capex. Lenders loved it. Sponsors paid up for it. Debt was layered on top because the model looked predictable.

Now the model feels less certain. And here’s where the tension builds.

Equity trades every second. Credit doesn’t. Credit moves when a refinancing hits the calendar. Software makes up a meaningful slice of speculative-grade loans and an even larger piece of private credit tied to tech services. 

Those maturities are not theoretical. They’re dated.

Secondary loan prices have already slipped. 

That sets the tone for new deals. Lenders don’t need panic to tighten. A higher floor. A stricter covenant. A smaller add-back. Structure shifts quietly before defaults ever show up.

The real pressure point is the next large refinancing event, where lenders must price durability assumptions into structure rather than sentiment into multiples.

If it clears cleanly, confidence steadies. If it wobbles, sponsors rethink everything. That’s how tone resets for a quarter.

Equity repriced immediately. Documentation will reprice at the next refinancing event. Maturity dates remain fixed.

The illusion that software cash flows are structurally untouchable just broke. Equity volatility is forcing lenders to reassess durability before upcoming maturities. 

Refinancing terms, not stock multiples, will now reveal who truly has pricing power. The calendar, not sentiment, becomes the judge.

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Start with the maturity calendar, not the theme. 2026 to 2028 is where pressure builds. Deals that looked fine two years ago now face a different rate backdrop and less forgiving lenders.

Run the numbers assuming tighter terms. Higher floors. Lower leverage. Less EBITDA flexibility. Watch what happens to equity returns when structure gets stricter. That’s where optimism fades.

Dig into how exposed revenue is to automation. Not the headline story. The actual workflows. The real pricing power. The churn risk if alternatives get cheaper.

Expect consolidation to pick up. When credit gets selective, stronger balance sheets gain options. Weaker ones lose them.

And keep an eye on power and permitting. If timelines stretch, cost of carry eats into upside faster than most models admit.

AI is no longer only a growth narrative. It is altering refinancing conditions and shifting leverage tolerance across sponsor-backed structures.

Equity volatility opened the door. Now documentation, leverage, and time to cash are doing the sorting. 

Capital is becoming selective around durability and structure. In this phase, survival through the maturity wall carries more weight than the quality of the story.