AI Bond Supply Surge Prompts Investor Selectivity; Spreads Widen to 115 Basis Points

NEW YORK — Corporate bond investors are demanding larger concessions from AI-related issuers as a record wave of hyperscaler debt reshapes the investment-grade market, pushing spreads on AI-linked bonds to 115 basis points versus 78 basis points for the broader index. Gross debt issuance from hyperscalers is projected to reach a record $420 billion in 2027, up 60% from prior estimates, according to Goldman Sachs. Overall U.S. corporate issuance through August rose 30% year-over-year to $1.9 trillion, SIFMA data show. The supply glut has split the market. Alphabet (GOOGL) offered a sizable concession to complete its August sale, while insurance broker Aon's $13.5 billion acquisition financing drew $65 billion in orders this month, tightening its 30-year tranche by 35 basis points. Portfolio managers at BlackRock, Wellington and Brown Advisory say the widening reflects supply-demand dynamics, not default fears. Some AI issuers now price double-A credits near triple-B levels. Investors are nearing single-name concentration limits and prefer keeping capital available for future hyperscaler deals at wider spreads.