According to reports, JP Morgan has halted the software company Qualtrics' financing worth USD 5.3 billion

According to Bloomberg, due to concerns about the impact of AI on the software industry, JP Morgan (JPM.US) has led several banks to suspend a $5.3 billion financing for software vendor Qualtrics.

JP Morgan began promoting Qualtrics' debt to high-yield bond and leveraged loan investors as early as late February but has not been able to generate sufficient demand. The risk exposure of this transaction is not limited to JP Morgan alone. It is reported that, in addition to JP Morgan, another 10 banks have provided debt commitments for this acquisition, including BMO, Citigroup (C.US), Deutsche Bank, Goldman Sachs (GS.US), KKR Capital Markets, Mizuho, Morgan Stanley (MS.US), Canadian Imperial Bank of Commerce, UBS, and Wells Fargo (WFC.US).

As per usual practice, these banks would distribute the debt to external investors before the transaction is completed, earning substantial underwriting fees in the process. However, if they are unable to complete the distribution, they must retain this debt on their own balance sheets, and if they are subsequently forced to sell at a discount, they will face substantial losses.

The Financial Times cited informed sources stating that JP Morgan notified investors on Tuesday (17th) that the related debt sales are immediately suspended, with the timing of any restart depending on market conditions. This halt directly impacts private equity giant Silver Lake and the Canada Pension Plan Investment Board, both of which jointly acquired Qualtrics for $12.5 billion in 2023.

Qualtrics currently has a bond worth approximately $1.5 billion maturing in 2030, with its trading price in the secondary market dropping to about 86 cents, a decline of more than 10% since February