The relentless expansion of artificial intelligence is reshaping the corporate debt landscape, pushing U.S. investment-grade bond issuance to a staggering $1.7 trillion in 2025. This monumental figure brings the market tantalizingly close to the all-time record set in 2020 during the COVID-19 pandemic debt rush, according to data tracked by the Securities Industry and Financial Markets Association (Sifma).
The Engine Behind the Surge: AI's Capital Hunger
This year's colossal debt sales were not merely about refinancing. A significant and powerful driver has been the insatiable capital demands of the AI revolution. Major technology conglomerates, including Meta, Alphabet, Amazon, and Oracle, have aggressively tapped the bond markets to fund the construction of massive data centres and the complex energy systems required to power them.
Analysts at Goldman Sachs estimate that AI-related borrowing now constitutes roughly 30% of net investment-grade issuance. This trend is not a fleeting one. "This is just the tip of the iceberg," stated Erin Spalsbury, head of U.S. investment-grade bonds at Insight Investment, predicting even more issuance in the coming year as the market prepares for continued expansion.
Investor Jitters and Shifting Credit Conditions
Despite the euphoria surrounding AI's potential, a note of caution is emerging on Wall Street. Some investors have already begun hedging against the risk that the AI boom could transform into a credit bust, especially if the anticipated financial returns fail to materialize quickly enough to justify the enormous surge in corporate borrowing.
This concern was highlighted by recent events like Oracle's quarterly earnings, where revenue fell short of expectations while spending on data centres overshot, triggering sell-offs in both tech equity and debt. These doubts are beginning to influence credit conditions. After corporate borrowing costs relative to U.S. Treasuries hit multi-decade lows over the summer, the spread has widened slightly to just above 0.80 percentage points as investors react to the "flood" of AI-related issuance.
Looking Ahead: A Record-Breaking 2026 on the Horizon
The pipeline for debt sales shows no signs of slowing. Market participants widely anticipate that 2026 could shatter the COVID-era record, applying further upward pressure on borrowing costs for top-rated companies. This expectation is grounded in two powerful factors.
First, the AI build-out itself requires staggering investment; JPMorgan estimates the sector will need to borrow $1.5 trillion by 2030. Second, a massive wave of maturing debt is approaching. Dan Mead, head of the investment-grade syndicate at Bank of America, noted that more than $1 trillion in debt is maturing in each of the next three years, necessitating large-scale refinancing operations. A busy schedule of mergers and acquisitions is also expected to contribute to significant new bond sales.
"We expect a similarly busy 2026, with the potential for it to be the largest issuance year ever for investment-grade bonds," Mead projected. Analysts like Hans Mikkelsen, a U.S. credit strategist at TD Securities, estimate that the added supply could push borrowing costs for top companies higher by approximately 0.2 to 0.3 percentage points next year, testing investors' appetite for U.S. corporate debt as the AI financing saga continues to unfold.
