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Timely Perspectives, Unconventional Thinking 

We’re excited to share timely market insights, thoughtful perspectives and expert commentary as part of our commitment to providing modern investment solutions to modern challenges.

Blog hero image

BLOGThe Bird's Eye View

Timely Perspectives, Unconventional Thinking 

We’re excited to share timely market insights, thoughtful perspectives and expert commentary as part of our commitment to providing modern investment solutions to modern challenges.

Alternatives

The Software Slump

Michelle Handy

Senior Managing Director and Chief Investment Officer of Direct Lending, Napier Park Global Capital

Next-generation artificial intelligence (AI) tools from the likes of OpenAI and Anthropic have sounded alarms about potential disruption to the tech landscape and weighed heavily on stocks in the enterprise software space. The S&P Software & Services Select Industry Index, for example, is down more than 23% from its September 2025 peak.1

More recently, AI concerns have spread to the credit market. Broadly syndicated loan prices declined $0.90 in January, driven by a $3.60 fall in software, which at 16% is the largest component of the market.2 While private credit lacks a secondary market to capture short-term changes in sentiment, the sharp declines in the share prices of publicly traded private credit vehicles suggest the strain is also being felt in middle market direct lending; a number of high-profile business development companies and listed alternative credit managers are trading 25% or more off recent peaks.3

While the advancement of AI tools is likely to have an impact across software—and many other sectors—we believe there is more nuance to the AI story than the headlines would suggest. The degree of dislocation will likely vary among borrowers. In our view, enterprise software platforms with differentiated offerings, large installed bases and deep integration in customer ecosystems are likely to be most resilient in the face of AI—or potentially even add value to their client relationships by leveraging emerging functionality. In the meantime, credit quality statistics for the industry overall remain strong, and long-term contractual obligations may blunt immediate margin pressure.4

 

We believe there is more nuance to the AI story than the headlines would suggest.

We’ve written previously about the importance of prudence in today’s market environment of tight spreads, all-in yield compression and heightened idiosyncratic risk, and we believe the swift repricing of software credits year to date underscores our view that caution is the new conviction.

1Source: S&P Global; data as of February 9, 2026.
2Source: BofA Securities; data as of February 4, 2026.
3Source: Bloomberg; data as of February 9, 2026.
4Source: KBRA Research; data as of February 5, 2026.

The information contained in this material is provided by First Eagle Investment Management, LLC (“FEIM”) and its global subsidiaries (collectively, “First Eagle”). FEIM is an investment adviser registered with the US Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training.

This material is for informational purposes only and reflects prevailing conditions and the judgment of the author(s) as of the date of publication, all of which are subject to change. This material should not be relied upon as investment advice; it does not constitute a recommendation to buy or sell a security or other investment; and it is not intended to predict or depict the performance of any investment. This material is not being provided in a fiduciary capacity and is not intended to recommend any investment policy or investment strategy or consider the specific objectives or circumstances of any investor. We consider the information in this material to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of appropriateness for investment.

Prospective investors should inform themselves and consult with an investment, tax or legal professional as to any applicable legal requirements, taxation and exchange control regulations in the countries of their citizenship, residence or domicile that may be relevant prior to investing.

THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

All investments involve the risk of loss of principal.

Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

The information presented does not reflect the performance of any fund, strategy or account managed or serviced by First Eagle, and there is no guarantee that investors will experience the type of performance reflected. There is no guarantee that any market forecast set forth in this video will be realized. There is no guarantee that any historical trend referenced herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. The mention of specific securities is not a recommendation or solicitation to buy, sell or hold any particular security and should not be relied upon as investment advice.

Availability of the products or services described may be restricted by law in certain jurisdictions. This material may not be distributed, published or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

Alternative investments can be speculative and are not suitable for all investors. Investing in alternative investments is only intended for experienced and sophisticated investors who are willing and able to bear the high economic risks associated with such an investment. Investors should carefully review and consider potential risks before investing. Certain of these risks include:

  • Loss of all or a substantial portion of the investment;
  • Lack of liquidity in that there may be no secondary market or interest in the strategy and none is expected to develop;
  • Volatility of returns;
  • Interest rate risk;
  • Restrictions on transferring interests in a private investment strategy;
  • Potential lack of diversification and resulting higher risk due to concentration within one or more sectors, industries, countries or regions;
  • Absence of information regarding valuations and pricing;
  • Complex tax structures and delays in tax reporting;
  • Less regulation and higher fees than mutual funds;
  • Use of leverage, which magnifies the potential for gain or loss on amounts invested and is generally considered a speculative investment technique and increases the risks associated with investing in the strategy;
  • Carried interest, which may cause the strategy to make more speculative, higher risk investments than would be the case in absence of such arrangements; and
  • Below-investment-grade loans, which may default and adversely affect returns.

Broadly-syndicated loans (BSLs) typically refer to floating-rate commercial loans provided by a group of lenders—the syndicate—to a noninvestment grade borrower.

A business development company (BDC) is a closed-end fund that is required to invest at least 70% of its assets in private or thinly traded public companies in the form of long-term debt and/or equity capital, with the goal of generating current income and/or capital gains.

Direct lending refers to a loan agreement negotiated between a borrower and single or small group of nonbank lenders. Direct lending can also be referred to as “private credit” or “private lending.”

Private credit refers to a loan agreement between a borrower and single or small group of nonbank lenders. Private credit can also be referred to as “direct lending” or “private lending.”

Indexes are unmanaged and do not incur management fees or other operating expenses. One cannot invest directly in an index.

S&P Software & Services Select Industry Index (Gross/Total) measures the performance of stocks in the S&P Total Market Index that are classified in the application software, interactive home entertainment, information technology consulting and other services, and systems software sub-industries. A total-return index tracks price changes and reinvestment of distribution income.

United Kingdom
Napier Park Global Capital, Ltd. is authorised and regulated by the Financial Conduct Authority (FRN: 541427) in the United Kingdom.

Middle East
This material is for information purposes only and has not been, and will not be, registered with or reviewed or approved by any regulator located in the Middle East. It does not constitute or form part of any marketing initiative, any offer to issue or sell, or any solicitation of any offer to subscribe to or purchase, any products, strategies or other services, nor shall it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract resulting therefrom. In the event that the recipient of this material wishes to receive further information regarding any products, strategies or other services, it shall specifically request the same in writing from an authorized financial adviser.

Canada 
Pursuant to the international adviser registration exemption in National Instrument 31-103, First Eagle Investment Management, LLC. is informing you that: (i) First Eagle Investment Management, LLC. is not registered in Canada and is advising you in reliance upon an exemption from the adviser registration under National Instrument 31-103;  (ii) First Eagle Investment Management, LLC’s jurisdiction of residence is New York, USA; (iii) there may be difficulty enforcing legal rights against First Eagle Investment Management, LLC. because it is a resident outside of Canada and all or substantially all of its assets may be situated outside of Canada.

FEF Distributors, LLC (“FEFD”) (SIPC), a limited purpose broker-dealer, distributes certain First Eagle products. FEFD does not provide services to any investor but rather provides services to its First Eagle affiliates. As such, when FEFD presents a fund, strategy or other product to a prospective investor, FEFD and its representatives do not determine whether an investment in the fund, strategy or other product is in the best interests of, or is otherwise beneficial or suitable for, the investor. No statement by FEFD should be construed as a recommendation. Investors should exercise their own judgment and/or consult with a financial professional to determine whether it is advisable for the investor to invest in any First Eagle fund, strategy or product.

First Eagle Investments is the brand name for First Eagle Investment Management, LLC and its subsidiary investment advisers.

First Eagle Alternative Credit and Napier Park are brand names for the two subsidiary investment advisers engaged in the alternative credit business.

© 2026 First Eagle Investment Management, LLC. All rights reserved.

    Fixed Income

    A Prescription for Opportunity in Muni Healthcare

    John Miller, CFA

    Head and Chief Investment Officer of Municipal Credit Team

    As fundamental municipal credit managers, we believe that research-driven underwriting can help us identify investment opportunities in out-of-favor areas with wide dispersions in credit spreads, both across sectors and among individual names. One area we believe is particularly rich with opportunity is the healthcare sector, which underperformed in 2025.1 Investors grew concerned about the policy ramifications of Trump’s tax-and-spending bill, including lower reimbursement rates, lower utilization rates and pressure on federal and state aid, as well as the impacts of immigration and tariffs on labor and operating costs.

    Cuts to Medicaid and Medicare—which comprise approximately 44% of US hospital spending2—outlined in the bill will total more than $1 trillion through 20343 and are estimated to eliminate healthcare coverage for up to 15 million people.4 Though set to begin in 2026, many of these cuts will ramp up over time, which we believe will give hospitals, healthcare providers and insurance carriers time to adjust their operating models. The delayed nature of the cuts will also give Medicaid and proponents of the Affordable Care Act opportunities to push back or eliminate the implementation of the cuts. Lastly, we believe an aging population in need of chronic disease management and long-term care will further support healthcare utilization.

     

    Many of these cuts will ramp up over time, which we believe will give healthcare organizations time to adjust their operating models.

    Within this sector, we believe that larger, well-managed hospital systems, specialty-care hospitals and hospitals that provide essential care in geographies with population growth and a favorable payer mix are more likely to be resilient in the face of policy changes. These policy changes may also drive consolidation of the hospital space as smaller hospital systems and providers in rural areas seek financial stability and access to capital. By identifying what we view as essential-care providers in larger, well-funded geographies or smaller hospitals that may be well positioned to be acquired by larger providers with a more favorable payer mix, we believe we can identify credits with attractive yields and prices and lower default risk.

    1 Source: FactSet; data as of February 6, 2026.
    2 Source: KFF; data as of September 3, 2025 (most recent available).
    3 Source: Congressional Budget Office; data as of July 4, 2025 (most recent available).
    4 Source: Center on Budget and Policy Priorities; data as of August 27, 2025 (most recent available).

    The information contained in this material is provided by First Eagle Investment Management, LLC (“FEIM”) and its global subsidiaries (collectively, “First Eagle”). FEIM is an investment adviser registered with the US Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training.

    This material is for informational purposes only and reflects prevailing conditions and the judgment of the author(s) as of the date of publication, all of which are subject to change. This material should not be relied upon as investment advice; it does not constitute a recommendation to buy or sell a security or other investment; and it is not intended to predict or depict the performance of any investment. This material is not being provided in a fiduciary capacity and is not intended to recommend any investment policy or investment strategy or consider the specific objectives or circumstances of any investor. We consider the information in this material to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of appropriateness for investment.

    Prospective investors should inform themselves and consult with an investment, tax or legal professional as to any applicable legal requirements, taxation and exchange control regulations in the countries of their citizenship, residence or domicile that may be relevant prior to investing.

    THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

    All investments involve the risk of loss of principal.

    Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

    The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur. Municipal bonds are subject to credit risk, interest rate risk, liquidity risk and call risk. However, the obligations of some municipal issuers may not be enforceable through the exercise of traditional creditors’ rights. The reorganization under federal bankruptcy laws of a municipal bond issuer may result in the bonds being cancelled without payment or repaid only in part, or in delays in collecting principal and interest.

    The information is not intended to provide and should not be relied on for accounting or tax advice. Any tax information presented is not intended to constitute an analysis of all tax considerations.

    The information presented does not reflect the performance of any fund, strategy or account managed or serviced by First Eagle, and there is no guarantee that investors will experience the type of performance reflected. There is no guarantee that any market forecast set forth in this video will be realized. There is no guarantee that any historical trend referenced herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. The mention of specific securities is not a recommendation or solicitation to buy, sell or hold any particular security and should not be relied upon as investment advice.

    Availability of the products or services described may be restricted by law in certain jurisdictions. This material may not be distributed, published or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

    United Kingdom 
    Napier Park Global Capital, Ltd. is authorised and regulated by the Financial Conduct Authority (FRN: 541427) in the United Kingdom.

    Middle East 
    This material is for information purposes only and has not been, and will not be, registered with or reviewed or approved by any regulator located in the Middle East. It does not constitute or form part of any marketing initiative, any offer to issue or sell, or any solicitation of any offer to subscribe to or purchase, any products, strategies or other services, nor shall it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract resulting therefrom. In the event that the recipient of this material wishes to receive further information regarding any products, strategies or other services, it shall specifically request the same in writing from an authorized financial adviser.

    Canada 
    Pursuant to the international adviser registration exemption in National Instrument 31-103, First Eagle Investment Management, LLC. is informing you that: (i) First Eagle Investment Management, LLC. is not registered in Canada and is advising you in reliance upon an exemption from the adviser registration under National Instrument 31-103;  (ii) First Eagle Investment Management, LLC’s jurisdiction of residence is New York, USA; (iii) there may be difficulty enforcing legal rights against First Eagle Investment Management, LLC. because it is a resident outside of Canada and all or substantially all of its assets may be situated outside of Canada.

    FEF Distributors, LLC (“FEFD”) (SIPC), a limited purpose broker-dealer, distributes certain First Eagle products. FEFD does not provide services to any investor but rather provides services to its First Eagle affiliates. As such, when FEFD presents a fund, strategy or other product to a prospective investor, FEFD and its representatives do not determine whether an investment in the fund, strategy or other product is in the best interests of, or is otherwise beneficial or suitable for, the investor. No statement by FEFD should be construed as a recommendation. Investors should exercise their own judgment and/or consult with a financial professional to determine whether it is advisable for the investor to invest in any First Eagle fund, strategy or product.

    First Eagle Investments is the brand name for First Eagle Investment Management, LLC and its subsidiary investment advisers.

    © 2026 First Eagle Investment Management, LLC. All rights reserved.

     

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