Global credit markets are showing signs of caution as investors pull back from treating the asset class as a safe haven, according to Financial Post reports. Spreads on global corporate bonds have blown out about 5 basis points this week, marking the most significant widening since March and leaving them at their widest in half a year, according to a Bloomberg index. Trading at the start of the global day in Asia on Friday pointed toward more selling, with yield premiums on investment-grade notes increasing 2 to 4 basis points, as traders indicated. This contrasts with gains in Treasuries following mostly dovish comments from United States Federal Reserve officials, highlighting the divergence between traditional safe havens and corporate debt.
The AI boom is creating a structural transformation of the US credit markets, with Goldman Sachs reporting that AI-related issuance by low-rated firms has reached $88 billion this year, according to The Economic Times. In the first 11 months of 2025, AI-related issuance in leveraged finance stood at just $20 billion, as reported by Neuberger Berman data cited by Reuters. This represents a massive shift from traditional corporate borrowing patterns, with AI infrastructure supply in the high-yield market reaching $40 billion so far this year, compared with $12 billion for all of 2025, according to BNP Paribas data. The spending is equivalent to 1.9% of all US economic activity this year.
Recent major AI-related debt issuances have faced significant market resistance, with Paramount Skydance Corp. issuing $52 billion of debt this week to fund the biggest Hollywood buyout ever, according to Financial Post. Its junk notes were among the hardest hit in initial trading, demonstrating the market's growing selectivity toward AI-related credit. This follows SoftBank Group Corp.'s $11.1 billion junk debt deal for which it had to pay record yields, including 9.75% on a 7.5-year bond, as reported by Reuters. September issuance hit $38.51 billion, marking the busiest month this year for the high-yield market, with large junk bond offerings including the SoftBank deal.
Despite the sharp increase in issuance, overall investor appetite for lower-quality AI-related credit remains limited, as reported by Reuters. Buyers in leveraged finance have generally gravitated toward double-B-rated companies, which sit just below investment grade. Demand has been strongest for borrowers with predictable revenue streams, long-term contracts, tangible assets and established customer bases, according to fund managers cited by Reuters. Data centers have accounted for a significant share of AI-related issuance, with Erin Brown, head of leveraged finance at BNP Paribas, noting that data centers have provided much of the new supply supporting the high-yield market. The increased issuance has helped support an otherwise subdued high-yield market, with high-yield volumes being broadly flat year over year and materially lower without new-money issuance from data centers.
The broader AI financing boom is unfolding against a tougher backdrop for borrowers, with rising U.S. Treasury yields increasing the benchmark cost of capital, putting additional pressure on corporate debt markets, as reported by Reuters. Elsewhere in the riskier parts of the U.S. debt market, spreads jumped above 1,000 basis points over Treasuries for the first time since the regional banking crisis in 2023, following a steady rise since April as investors began to anticipate the Fed's next rate hike. Sheldon Chan, a portfolio manager for Asian and Emerging market credit at T. Rowe Price Group, noted that "it's that choppiness that keeps people away from the market." The longer term view in the U.S. is more uncertain, given economic growth is still good, with potential for more upward pressure on U.S. rates going forward, according to market analysts.
