Listen to the latest episode of Credit Exchange with Lisa Lee
Published in London & New York
10 Queen Street Place, London
1345 Avenue of the Americas, New York
Creditflux is an
company
© Creditflux Ltd 2026. All rights reserved. Available by subscription only.
News Analysis
AI is reshaping capital markets, say Milken confab attendees
by Lisa Fu & Lisa Lee
Artificial intelligence will be the most transformative technology of our lifetime, reshaping everything, including capital markets. This was the dominant prediction at the annual Milken Global Conference 2026.
From financing the massive capex spend needed, to the possible productivity gains, to the disruption it will cause, the focus on AI pushed nearly all other topics off the table — including the Iran war, which has stalled the passage of oil tankers through the Strait of Hormuz and sent gas prices in Beverly Hills, the site of the confab, soaring to more than USD 6 a gallon.
The US faces a shortfall in power, computing capacity and chips for AI — gaps that will demand vast capital investment, said Larry Fink, CEO of BlackRock, on a panel. But the AI phenomenon will bring opportunities as well as disruption.
“I don’t believe we’re moving fast enough,” Fink said. “There is not an AI bubble. There is the opposite. We have supply shortages.”
Ratio of private credit borrower defaults over past 12 months (%)*
*Chart shows ratio of total borrowers downgraded to D or SD over past 12 months relative to count of total actively-rated borrowers at beginning of measurement period, less one-half of total non-defaulted credit ratings discontinued during period. Data to 3 April 2026.
Source: Morningstar DBRS
The role of private credit
Milken Global Conference is named after American financier Michael Milken, who spearheaded the modern high-yield bond market. So it was no surprise that credit markets also commanded the stage.
“[AI] can’t be funded out of one structure or one marketplace,” said Jim Zelter, president of Apollo Global Management, on a panel. Companies will rely on excess cashflow, the public investment grade credit market, the infrastructure market and private credit, he said.
This year’s event was filled with private credit defenders both on and off stage arguing against the barrage of negative headlines the asset class has garnered in recent months. Many told Creditflux they felt recent critical headlines have been overly harsh, particularly over the redemption from semi-liquid funds.
I don’t believe we’re moving fast enough
Larry Fink
CEO
BlackRock
In general, the sentiment on private credit was constructive. But there were growing concerns about defaults and losses (see next page for Medallia’s troubles).
“We have seen more deterioration in credit [in] the private part of the portfolio over the last 12 to 18 months,” said Megan Neuburger, managing director and head for US and Canada corporate ratings at Fitch Ratings, on a different panel.
“You saw a lot of 8x or 7x levered software loans done to back buyouts at 15x-20x. Those businesses are not worth that any more, even if their earnings are the same. The risk profile has just changed. That’s the problem,” said Fortress’s global co-head of corporate credit Brian Stewart on the sidelines.
Cloudy outlook for credit
“I think AI will accelerate the demise of certain software businesses that were already laggards,” said Jeff Levin, partner and head of credit at Thoma Bravo, on a panel.
As always, there are pockets of dislocation and struggling credits, which is normal when investing in high yield credits, Adrienne Butler, head of global CLOs at Barings, told Creditflux at the sidelines of the conference.
“I question every credit we look at…but generally speaking, I’ve been surprisingly happy with the performance we’ve seen in credit,” Butler said of the environment, broadly.
Despite broadly solid growth expectations, the biggest spoiler could be a global recession sparked by rising energy costs and fuel shortages.
IMF managing director Kristalina Georgieva warned that the ongoing US-Iran conflict is likely to push inflation higher and dampen growth.
Hot news from LA: billionaires shivered and stars were glimpsed
The annual Milken Global Conference held in Beverly Hills was packed with the stars of finance, and a few stars who may even be recognisable to the general public. While the sun did shine over the Beverly Hilton as well as the Waldorf Astoria (two hotels rather than one this year), the typically genial California weather turned chilly, leaving billionaires and your correspondents shivering at the rooftop after-hours parties. But the market kept moving and the electronic violinist played on.
Your correspondents saw basketball legend Shaquille O’Neal being escorted by bodyguards through the Beverly Hilton, congressman Dan Crenshaw chatting away at an outdoor reception, and hedge fund maven Bill Ackman being whisked away to dinner in a black van.
The real world made its mark. The already steep ticket prices went even higher, according to attendees, prompting some to establish unaffiliated meetings and gatherings just off-site. One senior banker had his American Airlines flight cancelled and was left scrambling to get on another plane.
