BIS Warns AI Stock Selloff Could Spill Into Credit Markets
The Bank for International Settlements warns that a sharp selloff triggered by an AI boom correction could rapidly cascade into credit markets, echoing patterns from 2008 and 2020 where equity drops and credit spread widening moved in tandem. The BIS flags an additional risk: private credit has become a more important funding source for smaller companies, and software-sector borrowers are increasingly linked to multiple lenders simultaneously. This means an AI-driven shock could propagate through the less transparent credit system faster than expected.