AI Capital Rush! Global Bond Issuance Hits Historic Record

The global bond market is undergoing a historic expansion driven by artificial intelligence. A wave of borrowing among tech giants vying for dominance in AI infrastructure is fundamentally reshaping the competitive landscape of global capital markets.

According to a Bloomberg report on October 29, compiled data show that financial institutions, corporations, and governments have raised a total of $6.61 trillion this year via both investment-grade and junk bonds, up 15% year-over-year and already surpassing the historical record for 2025 with two months still to go in the year. Among these, cloud computing giants and data center developers have alone issued nearly $368 billion in debt—more than six times that of the same period last year—accounting for about one-third of the increase in total borrowing this year, surpassing all other non-financial sectors and doubling the new debt issued by government entities.

This trend is profoundly changing the competitive ecosystem of the global debt market. This year, Amazon has become the fourth largest bond issuer in the world, trailing only Germany, the EU, and Italy, surpassing France and the UK; among the top ten US corporate issuers, tech firms now hold five spots, while financial institutions’ share has dropped to its lowest point in at least a decade. Meanwhile, with rising global yields and widening fiscal deficits among governments, competition for capital is intensifying, and signs of market stress have emerged.

“Fundamental Reshuffle”: AI Reshapes Global Borrowing Landscape

The wave of AI infrastructure construction is triggering structural change in the world’s largest bond markets.

According to Bloomberg, John Servidea, Co-Head of Global Investment Grade Financing at JPMorgan, said, “In the span of one year, we’ve witnessed a fundamental reshuffle at the top of the world’s largest markets. A new long-term theme has emerged around AI.”

According to Bloomberg Intelligence data, hyperscaler and emerging cloud service providers tracked by Bloomberg are expected to invest nearly $4.5 trillion in AI infrastructure over the next three years, an unprecedented level of spending.

In the US market, Amazon has become the largest corporate borrower, followed by Alphabet. The dominance of tech firms in the bond market signals the disruption of a decade-long trend where financial institutions occupied the top spots among corporate issuers—their market share has now fallen to its lowest level in at least ten years.

Supply Digestion Pressure: Investors Demand Higher Compensation

Large-scale bond issuance is not without its hurdles, as the market is under obvious supply digestion pressure.

Investors initially rushed to snap up AI infrastructure-related bonds, but as mega-issuances continued to emerge, growing concerns about overspending and uncertainty around AI monetization timelines prompted some investors to step back and demand higher yields for compensation. In the US, investment-grade bonds issued by data center developers for fundraising have reached yields as high as 7.2%.

CoreWeave, a speculative-grade company providing computing power to tech giants like Meta, saw its bonds heavily sold off earlier this month due to market concerns about its rising debt burden, sharply increasing the company’s credit risk and triggering ripple effects through the broader credit market. Even for blue-chip hyperscaler cloud companies like Meta Platforms and Oracle, the cost of default protection has surged dramatically.

The overall credit environment is also deteriorating. High oil prices, escalating geopolitical tensions in the Middle East, and the selloff in French sovereign bonds have all weighed on the market mood. Yields on some US Treasuries recently climbed to their highest levels since 2002, pushing up the cost of corporate financing and refinancing.

Rate Pressure: AI Capital Demand May Push Up Neutral Rates

The surge in capital demand triggered by the AI investment boom has begun to catch the attention of global central banks.

International Monetary Fund Managing Director Kristalina Georgieva this month called on central banks to maintain a “cautiously hawkish stance” in the face of persistent inflation pressures. The world’s major central banks are expected to enter 2027 with a more restrictive monetary policy posture.

According to Citi’s Head of Emerging Markets Economics, Johanna Chua, on a Citi podcast last week, “Central banks are starting to realize that capital demand has indeed surged to a certain extent in the AI cycle, and this is creating upward pressure on R-star (the neutral interest rate).” R-star refers to that “neutral” rate which neither stimulates nor restrains economic growth. This means that AI-driven capital demand may structurally lift the long-term central level of global interest rates.

A New Wave of Issuance May Peak in November

Despite short-term headwinds, the market remains optimistic about the long-term prospects for AI capital expenditure, with November set to possibly bring a new wave of issuance.

Neil Sun, Portfolio Manager at RBC Global Asset Management, said that although the financing pressure among hyperscalers has led to some short-term “supply digestion issues,” the outlook for AI capital spending remains robust, laying the foundation for continued large-scale borrowing. “Fundamentally, they’re in good operational health,” Sun said in an interview, adding that demand for computing power “is still very strong.” He expects AI investment to last through 2027, despite the rising rate environment.

Matteo Benedetto, Co-Head of EMEA Investment Grade Syndicate at Morgan Stanley, said, “November is actually one of the busiest months of the year for corporate deals. For companies pursuing M&A or capital expenditure who can’t afford to wait, this remains a pre-funding window.” Morgan Stanley expects that after the volatility of the past two months, November will see a flurry of borrowing activity.