AI bond issuance widens dollar and euro credit gap

AI-related borrowing is becoming a major force in investment-grade credit as hyperscalers fund large capital expenditure plans across currencies. The investment cycle remains on pace to surpass the telecom boom of the late 1990s and become the largest since the railway buildout of the 19th century in inflation-adjusted terms. AI-related issuers accounted for six of the eight non-financial U.S. investment grade companies that raised more than $20 billion in the USD corporate bond market.

Capital needs have pushed hyperscalers beyond the dollar market into euro debt and smaller primary markets in Canada, the UK, Japan, and Switzerland. Bloomberg consensus forecasts imply hyperscaler capital spending will exceed $1 trillion per year from 2027 onward, while 2026 year-to-date net supply of index-eligible hyperscaler debt has reached $120 billion in USD and €22 billion in EUR.

The heavier dollar supply appears to be affecting relative performance. Hyperscalers now make up nearly 5% of the USD IG index versus 1.2% of the EUR IG market, and issuer-matched comparisons for Amazon and Alphabet show euro-denominated bonds outperforming duration-matched dollar bonds. The gap points to demand fatigue in USD investment grade and suggests AI issuance is emerging as a distinct risk factor across issuers, curves, and benchmark indices.