Indian companies are increasingly turning to bank loans as corporate bond yields have risen sharply, with three-year corporate bond yields climbing nearly 80 basis points to 7.95% in the fourth quarter while interest rates on credit have remained steady at around 8.40%. According to The Economic Times, this shift reflects changing expectations around the interest-rate cycle, with markets pricing in the possibility of higher policy rates ahead. For AAA-rated companies, five-year bond rates have increased from 6.65% in May 2025 to 6.90% in May 2026, while 10-year paper rates rose from 6.85% to 7.74% during the same period. Companies are choosing bank loans for lower near-term volatility in borrowing costs, greater flexibility in negotiated pricing, and stronger funding certainty compared with increasingly volatile debt markets.
Apollo is exploring the sale of MidCap Financial Investment Corp., a publicly listed business development company valued at approximately $3 billion, according to recent reports. The potential transaction comes as private credit managers face a more demanding market cycle, with Apollo holding ongoing discussions about the sale of the vehicle tied to loans originated by Apollo's MidCap Financial platform. This strategic move reflects the firm's position as one of the world's largest alternative asset managers, which has built a credit platform spanning direct lending, asset-backed finance, retirement services, insurance-linked capital, and large-scale institutional mandates. The reported talks are not just about portfolio optimization but also signal broader industry trends toward portfolio triage and transparency in private credit markets.
The bond market repricing over recent weeks has fundamentally reset the cost of capital across all public companies, with long-dated yields climbing approximately 70 basis points in eleven weeks and the 30-year yield pushing past 5% for the first time since 2007. According to recent analysis, when the 10-year Treasury yield was 1.5% in 2021, a stock delivering 7% annual returns offered a healthy 5.5-percentage-point risk premium. Today, with the 10-year yield at 4.60%, that same stock must deliver approximately 10% returns to maintain the same risk-adjusted reward. This cost-of-capital reset particularly impacts companies that need to borrow to grow, including smaller businesses, middle-market companies with floating-rate debt, and highly indebted public companies whose financing costs have materially increased.
According to Apollo chief economist Torsten Slok, artificial intelligence has evolved beyond the stock market into a comprehensive capital markets transformation. As reported by Apollo, AI now accounts for nearly half of all investment-grade bond issuance, 87% of venture capital funding, and 38% of high-yield net issuance. The data, sourced from Goldman Sachs, JP Morgan, Bloomberg, Crunchbase, and Apollo analysts, shows this dramatic shift from an equity-only story to a capital markets-wide transformation. Slok published these findings on May 18 in his Daily Spark column, emphasizing that "what began as an equity market phenomenon has become a capital markets-wide transformation."
The private credit market is experiencing significant headwinds that are reshaping manager behavior and investment strategies. According to reports, publicly registered non-traded BDCs saw redemptions exceed fundraising for the first time in the first quarter of 2026, with gross sales of about $4.9 billion down 59% from the prior year and roughly $6.9 billion in redemption requests met. This represents a meaningful change in investor behavior, moving away from the one-way inflow momentum that defined much of the previous cycle. The market is becoming more selective, with investors demanding better reporting, regulators asking harder questions, and wealth platforms scrutinizing liquidity features more carefully.
The concentration of AI issuance reflects the massive capital expenditure commitments by major technology companies. According to Apollo Global president Jim Zelter, the top five hyperscalers — Amazon, Google, Meta, Microsoft, and Oracle — are projected to invest $751 billion in capital expenditures in 2026, an 83% increase over 2025. As reported by crypto.news, Zelter stated that this year's net origination of investment-grade debt is projected to surpass $1 trillion, outpacing net issuance relative to the U.S. Treasury market. The funding is primarily directed toward data center buildouts and AI infrastructure development across these hyperscalers, with an estimated $2 trillion in corporate bond supply from AI hyperscalers alone competing for the same duration-buying capital as Treasury issuance. Goldman Sachs' Shawn Tuteja noted the "massive rotation back into the hyperscalers, back into the AI names as people view that story as more inelastic demand and able to withstand the things that the consumers aren't."
