Aug 11, 2026 · 7 min · 4 segments
In this episode, we discuss how As AI-related issuance reshapes bond markets, differences in U.S. dollar and euro performance offer new insights into the roles of supply and technical factors. The…
The AI capital expenditure cycle remains solidly on track to eclipse the telecom boom of the late 1990s and become the largest investment cycle since the railway build-out of the 19th century in inflation-adjusted terms.
This year alone, AI related issuers accounted for six of the eight non-financial US investment grade IG companies that raised more than $20 billion in the USD corporate bond market.
Yet the ultimate scale of the build out remains deeply uncertain.
Bloomberg consensus forecasts imply that hyperscaler capital spending alone will surpass $1 trillion per year from 2027 onward, with no clear signs of moderation.
In fact, capital needs have been so large for the hyperscalers that they started to diversify their debt issuance into a range of foreign currencies.
While the most non-USD issuance has still taken place in the EUR market, as a group, these firms have also tapped primary markets in Canada, the UK, Japan, and Switzerland, albeit to varying degrees.
Beyond just the balance sheet re-leveraging impulse that is already widely acknowledged, large issuance figures have led to technical factors becoming an increasingly important driver of relative performance within the AI ecosystem on both sides of the Atlantic.
2026 year-to-date net supply of index-eligible AI hyperscaler debt stands at $120 billion and 22 billion euros in the USD and EUR corporate IG indices, respectively.
That said, while 2026 has been a record net supply year in both markets for these firms, it has been far more pronounced for USD denominated bonds.
Collectively, hyperscalers now account for nearly 5% of USD IG index versus just 1.2% for the EUR IG market.
One side effect of the rapid growth in the share of hyperscalers is that it has started to drive relative performance across both sides of the pond.
In theory, the underlying company fundamentals that drive credit spreads should be largely identical regardless of currency.
However, a gap in spread performance has started to emerge.
And even though it has slightly closed over recent sessions, it remains near the widest levels of the past few months.
This performance differential is difficult to attribute solely to firm-related risks.
Instead, it points to indications of demand fatigue in the USD IG market on a relative basis versus its EUR IG peer.
The AI capital expenditure cycle remains solidly on track to eclipse the telecom boom of the late 1990s and become the largest investment cycle since the railway build-out of the 19th century in inflation-adjusted terms.
This year alone, AI related issuers accounted for six of the eight non-financial US investment grade IG companies that raised more than $20 billion in the USD corporate bond market.
Yet the ultimate scale of the build out remains deeply uncertain.
Bloomberg consensus forecasts imply that hyperscaler capital spending alone will surpass $1 trillion per year from 2027 onward, with no clear signs of moderation.
In fact, capital needs have been so large for the hyperscalers that they started to diversify their debt issuance into a range of foreign currencies.
While the most non-USD issuance has still taken place in the EUR market, as a group, these firms have also tapped primary markets in Canada, the UK, Japan, and Switzerland, albeit to varying degrees.
Beyond just the balance sheet re-leveraging impulse that is already widely acknowledged, large issuance figures have led to technical factors becoming an increasingly important driver of relative performance within the AI ecosystem on both sides of the Atlantic.
2026 year-to-date net supply of index-eligible AI hyperscaler debt stands at $120 billion and 22 billion euros in the USD and EUR corporate IG indices, respectively.
That said, while 2026 has been a record net supply year in both markets for these firms, it has been far more pronounced for USD denominated bonds.
Collectively, hyperscalers now account for nearly 5% of USD IG index versus just 1.2% for the EUR IG market.
One side effect of the rapid growth in the share of hyperscalers is that it has started to drive relative performance across both sides of the pond.
In theory, the underlying company fundamentals that drive credit spreads should be largely identical regardless of currency.
However, a gap in spread performance has started to emerge.
And even though it has slightly closed over recent sessions, it remains near the widest levels of the past few months.
This performance differential is difficult to attribute solely to firm-related risks.
Instead, it points to indications of demand fatigue in the USD IG market on a relative basis versus its EUR IG peer.
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