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JPMorgan analysts estimated that $40 billion to $150 billion in loans within collateralized loan obligations (CLOs) could face credit risks due to AI-driven market dynamics. The assessment used market price data and credit ratings to identify vulnerabilities in CLO portfolios. This warning highlights systemic risks in the corporate debt market, particularly as AI models increasingly influence trading and risk assessment. Investors are now scrutinizing CLO valuations and potential defaults, which could ripple through global credit markets and impact institutional investors.
