Credit markets experienced a repricing in the first quarter of 2026, driven by rising concerns around AI-related disruption in the software sector. Leveraged credit markets appear particularly exposed given their higher concentration in software, while the US high yield bond market offers relative value, supported by lower sector exposure and improving structural quality. Key takeaways: AI-driven software disruption is repricing credit markets, with private credit and leveraged loans heavily concentrated in software (25-35%) facing accelerated defaults within 12-18 months; US High Yield offers natural insulation with only 3.5% software exposure. Contagion risk is mounting across private credit due to sector concentration, bank line dependence, and sponsor-borrower overlap, while US High Yield appears to be benefitting from superior diversification, credit quality, and daily liquidity. US High Yield presents a compelling alternative, offering the potential for attractive yields, portfolio resilience, and tactical flexibility that locked-up private credit investors cannot access.