AI Debt Spree Is Fueling a Credit Trading Frenzy: Credit Weekly

Group 1 - The growth in artificial intelligence spending and the private credit market is driving increased borrowing by companies and setting new records for corporate-bond trading [1][3] - An average of $50 billion in investment-grade and high-yield bonds was traded daily last year, a record high, up from $46 billion in 2024, reflecting the benefits of longer-term changes like electronic trading [2] - Major dealers, including Morgan Stanley and JPMorgan Chase & Co., anticipate record issuance of high-grade US corporate debt, partly due to companies funding AI infrastructure investments [3][4] Group 2 - Companies like Meta Platforms Inc. and Blue Owl Capital Inc. raised approximately $27 billion in high-grade debt for a data center project, indicating a trend of borrowing in private markets [4] - The issuance of longer-dated bonds by tech companies and utilities to fund AI-related investments is expected to increase trading activity [5] - The volatility in bond prices, influenced by shifts in the yield curve, is attracting hedge funds and active traders [6] Group 3 - As companies increase borrowing for AI projects, investors are becoming more cautious about their exposure to tech companies and utilities, leading to heightened hedging activity in the credit default swap market [7]