Goldman Sachs pitches short corporate loan strategies to hedge funds—The Financial Times UK

Investing.com – According to The Financial Times of the UK on Monday, Goldman Sachs has approached several hedge funds to promote a strategy of shorting corporate loans, due to the increasing demand in the market for shorting software companies and other debt sectors threatened by artificial intelligence.

Citing sources familiar with the matter, The Financial Times reported that the bank has shown clients complex trades aimed at profiting from further declines in loans to software companies, which have been under pressure in recent months.

Many of these companies are owned by private equity groups, which have spent billions of dollars from 2020 to 2024 acquiring enterprise software manufacturers, whose business models are now facing threats from advances in artificial intelligence.

These strategies, informally promoted by Goldman bankers, focus on products called total return swaps, derivatives that allow investors to profit when loan prices fall.

The Financial Times reported that Goldman has received client requests for these swaps in recent weeks. The bank has also begun informal outreach to hedge funds interested in shorting the prices of tech company loans.

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