AI spending drives US investment-grade bond issuance to record $1.76 trillion

US investment-grade bond issuance is set to hit an annual record on Monday, surpassing the $1.75 trillion sold in 2020 during the pandemic borrowing boom, as a surge in artificial intelligence spending pushes companies to raise more debt. According to data compiled by Bloomberg News, issuance will reach $1.76 trillion once Monday's trades are priced. Many analysts had expected this year's volume to set an annual record amid soaring AI spending projections.

AI-Related Financing Dominates

So far in 2026, the global investment-grade market has raised more than $300 billion in AI-related financing—nearly three times the full-year total for 2025. Nine separate US deals this year have each reached at least $25 billion; apart from Skydance Corp.'s acquisition-related financing, all came from technology companies.

"We're witnessing one of the most capital-intensive corporate cycles in a generation," said Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management. Despite rising financing costs, the borrowing spree continues, with investors repeatedly questioning whether the market can absorb more supply and whether the massive investments being financed will ultimately pay off.

Record Months and a October Slowdown

Four months this year have set issuance records. However, activity slowed sharply in October as inflation concerns and uncertainty over how far the Federal Reserve will ultimately tighten monetary policy triggered a global bond selloff, with some Treasury yields rising to their highest levels since 2002. Issuance this month stands at $79.9 billion, compared with this year's low of $139.6 billion in July.

Recent volatility has repeatedly prompted companies to postpone bond sales in search of better borrowing conditions. Treasury yields have retreated more than 0.2 percentage points from recent highs, but average investment-grade spreads closed last week near their widest level of 2026, offsetting some of the benefit of lower government yields.

Borrowers Press On

Despite this, borrowers in the US and elsewhere continue to issue debt to fund planned spending, acquisitions, or refinance existing debt. Some companies are moving deals forward to guard against further increases in borrowing costs in the coming months. The issuance boom is not confined to the US: according to Bloomberg-compiled data, global publicly syndicated bond issuance is just $70 billion shy of last year's record $6.61 trillion.

According to Bloomberg indices, US investment-grade bonds are down 1.49% this year as of Friday. Some new issues fell sharply in their first few days of trading. But those losses have not deterred investors from pouring into the asset class, helping companies continue to find buyers for new debt. US short- and intermediate-term investment-grade funds saw net inflows of about $235 billion through September, according to LSEG Lipper data.

"Higher borrowing costs have not constrained behavior at the aggregate level," said Tim Kurpis, head of investment-grade credit at AllianceBernstein, noting that AI buildout activity comes "largely from rate-insensitive technology companies." Meanwhile, "non-tech companies are grappling with higher rates, increasingly using equity financing for M&A and reducing long-dated issuance."

A Different Backdrop From 2020

Current yields are elevated, whereas the previous record occurred in a very different environment. In 2020, the Federal Reserve cut rates to near zero and pledged to buy corporate bonds to support markets and the economy during the pandemic. That year's sales were about 30% above the prior record. Last year's $1.59 trillion total was the highest since then.

Source: Bloomberg