AI’s funding boom: What bond markets are telling us

October 6, 2026

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The market is showing its hand. The cadence of AI-related debt issuance is increasingly influencing credit spreads, creating supply-driven risks as well as opportunities for active managers to dynamically adjust exposure as issuance ebbs and flows.

1. AI investment is driving a surge in tech debt issuance

Heavy and sometimes unexpected issuance has tested the market’s capacity to absorb supply. Since September 2025, the US investment-grade (IG) market has seen more than US$350bn in hyperscaler and datacenter-related issuance.

Our analysis suggests the cadence of issuance matters. Heavy technology supply has coincided with wider spreads across US IG and relative underperformance from technology, while pauses in issuance have seen spreads rally. Against this backdrop, US technology credit has repriced from around 10bps tighter than US investment grade in September 2025 to around 15bps wider today – a c.25bps relative move (Fig. 3).

Figure 1: Tech spreads have widened during heavy issuance – and rallied when supply pauses

Source: ICE Index Platform, as of September 16, 2026. US IG – ICE BofA US Investment Grade Corporate Index (C0A0), ICE BofA US Technology & Electronics Index (CITE). Indices used are the best proxy for subject under discussion. For illustrative purposes only.

Figure 2: Debt issuance by announcement date

Figure 3: US technology credit vs. US investment grade

2. What does this mean for investors?

With hyperscaler debt issuance expected to more than double from 2025 levels in 2026, and forecasts pointing to a further c.60% increase in 20271, the supply-driven adjustment may not be over and further bouts of spread pressure are possible. But issuance is unlikely to arrive evenly.

For active managers, the opportunity is not simply that technology spreads are wider, but to dynamically adjust exposure as the market moves between periods of heavy supply and digestion – while distinguishing temporary technical pressure from deterioration in underlying credit fundamentals.

At the same time, the market may evolve. Clearer communication from hyperscalers around their financing needs and a more predictable issuance cadence could help investors prepare for future supply and allow the market to absorb it more efficiently. Encouragingly, we are already seeing early signs of this from some issuers.

References to specific companies is for illustrative purposes only and does not reflect the holdings of any specific past or current portfolio or account.

Sources: Fig. 2.  Bloomberg, as of August 18, 2026. Fig 3. ICE Index Platform, as of September 16, 2026. US IG – ICE BofA US Investment Grade Corporate Index (C0A0), ICE BofA US Technology & Electronics Index (CITE). Indices used are the best proxy for subject under discussion. For illustrative purposes only.  1. Reuters, as of September 22, 2026. “Corporate bond buyers get picky with flood of AI debt”

This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed by Muzinich & Co. are as of September 2026 and may change without notice.

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Index descriptions

CITE -  ICE BofA US Technology & Electronics Index is a subset of ICE BofA US Corporate Index including all securities of Technology & Electronics issuers.

C0A0 - The ICE BofA  US Corporate Index tracks the performance of US dollar denominated investment grade corporate debt publicly issued in the US domestic market. Qualifying securities must have an investment grade rating (based on an average of Moody’s, S&P and Fitch), at least 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $250 million.

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