S&P Global Ratings lowered its outlook on Blackstone Secured Lending Fund to stable from positive on Tuesday, a move driven by concerns that potential artificial-intelligence disruption to software companies could erode the fund’s largest industry exposure. The fund’s software investments stood at $2.9 billion in fair value against a cost basis of $3.0 billion, representing roughly a 5% markdown, according to the S&P report. While the fund’s portfolio companies have not yet experienced a significant impact from AI-related disruptions, S&P said any underperformance could materially affect asset quality and the ability of lenders to refinance debt at maturity. The rating agency also cited lower financial flexibility and deteriorating asset quality as reasons for the outlook revision.
The Blackstone lending fund operates as a business-development company, a type of publicly traded investment vehicle that provides loans to middle-market companies. Its concentration in software has drawn increasing scrutiny as the rapid advancement of AI models and productivity tools pressures legacy software vendors. S&P said the market volatility across the direct lending and leveraged finance markets tied to AI disruption risk contributed to the decision.
In Australia, Morgan Stanley analysts warned that valuation multiples for the big four banks — Commonwealth Bank of Australia, Westpac Banking Corp, National Australia Bank, and ANZ Group Holdings — are likely to keep declining. The average forward earnings multiple for the four banks fell to 18.5 times 12-month forward earnings by the end of May, down from 19.2 times a month earlier, the analysts wrote. They attributed the expected further de-rating to higher interest rates, an economic slowdown, and reduced credit demand tied to expected changes in property-related tax concessions. Westpac and NAB look most vulnerable in the near term, the analysts said, adding that they are cautious on the banking sector at an industry level.
The deal to sell Laurentian Bank of Canada to Fairstone Financial Inc. continues to advance, according to CIBC analyst Paul Holden. The bank made progress toward closing the purchase, with the transaction receiving approval from the Competition Bureau. The acquisition still requires sign-off from the Office of the Superintendent of Financial Institutions and the Minister of Finance, but Holden said this should not prevent an end-of-year closing timeline. The analyst noted that regulatory milestones are following shareholder approval and the sale of a 4.7 billion Canadian-dollar syndicated loan portfolio to National Bank of Canada.
In cryptocurrency markets, bitcoin ETFs recorded $125.3 million in outflows on Friday, extending a streak of net withdrawals that began in mid-May. Over $3 billion has flowed out of bitcoin ETFs in the past three weeks, according to data from Coinglass cited by analysts at Bitfinex. The sustained outflows come even as equities markets continue to push higher, leading some investors to conclude that the correlation between crypto and stocks has weakened. “The market became increasingly vulnerable to distribution-led selling pressure,” Bitfinex analysts said in a note. Bitcoin was down 2.9% at $71,535, while ethereum fell 1.8% to $1,967.