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U.S. corporate bond markets in 2025 have entered a period of unusually high investment-grade (IG) issuance, nearly matching the pandemic peak of 2020. Through late November, companies had issued about $1.7 trillion in IG bonds — only slightly below 2020’s $1.8 trillion during the liquidity push at the onset of COVID-19. ([ft.com](https://www.ft.com/content/faa3d747-9a32-4219-93eb-a93c10502f06source=openai)) This reflects not only appetite to finance growth, but also a strategic play to lock in low borrowing costs ahead of potentially tighter financial conditions. ([economy.ac](https://economy.ac/news/2025/12/202512285727source=openai))
A central driver of this surge is AI infrastructure investment. Big Tech—Meta, Alphabet, Amazon, Oracle—has raised enormous sums: Meta’s $30 billion in October, Oracle’s $18 billion in September (among other financing), Amazon’s $12–15 billion later in the year. ([ft.com](https://www.ft.com/content/fc924871-e80f-46ea-aa8f-fe4ad5ce1c32source=openai)) Goldman Sachs estimates that AI-linked issuance accounts for roughly 25-30% of net IG supply. ([ft.com](https://www.ft.com/content/faa3d747-9a32-4219-93eb-a93c10502f06source=openai)) This capital is going toward data centers, power and cloud infrastructure—capital-intensive, long-term bets whose near-term payoffs are uncertain. ([ft.com](https://www.ft.com/content/fc924871-e80f-46ea-aa8f-fe4ad5ce1c32source=openai))
Credit markets have responded with mixed signals. Spreads compressed to historical lows in summer (~0.74 percentage points over Treasuries), reflecting eagerness to extend credit amid stable economic signals. ([ft.com](https://www.ft.com/content/faa3d747-9a32-4219-93eb-a93c10502f06source=openai)) But as issuance has ramped up—especially from AI hyperscalers—the supply pressures have begun widening spreads, particularly for long-dated debt. Investors and credit strategists express concern over overleverage in segments with weak near-term revenue generation. ([ft.com](https://www.ft.com/content/faa3d747-9a32-4219-93eb-a93c10502f06source=openai))
Looking ahead, forecasts estimate record issuance for 2026. JPMorgan projects ~$1.80-1.81 trillion in IG bonds, driven by AI capex, M&A, and refinancing more than $1 trillion in maturing debt. ([finance.yahoo.com](https://finance.yahoo.com/news/jpmorgan-sees-ai-boom-driving-170428827.html/source=openai)) Morgan Stanley estimates even higher: ~$2.25 trillion, which would exceed 2020 by ~30%. ([en.sedaily.com](https://en.sedaily.com/international/2025/12/24/ai-investment-boom-fuels-record-corporate-bond-issuance-insource=openai)) This implies the bond market must absorb exponentially more supply just as investors contend with Federal Reserve policy risk, interest rate uncertainty, and energy or power capacity constraints inherent in AI infrastructure deployment. ([ainvest.com](https://www.ainvest.com/news/jpmorgan-projects-ai-surge-fuel-1-81-trillion-2026-investment-grade-bond-sales-2511/source=openai))
Strategic implications for issuers, investors, and policymakers are significant. For issuers, leveraging cheap capital for AI build-outs can be transformational but risks becoming burdensome if revenues lag. For investors, sector concentration and longer maturities bring duration risk, default risk, and structural uncertainty about value creation in AI-driven business models. For regulators and policymakers, efficient power infrastructure, permitting, antitrust, tax incentives, and environmental constraints may determine whether this borrowing leads to sustainable value or dormant liabilities. Open questions remain around AI ROI time horizon; whether debt issuance will be front-loaded or evened out; how rising yields or tighter Fed policy could affect the ability to rollover maturities; and how energy, real estate and environmental/geographic constraints will shape project feasibility. ([reuters.com](https://www.reuters.com/business/retail-consumer/doubleline-wary-ai-funding-wave-that-could-alter-us-high-grade-debt-market-2025-11-24/source=openai))
