Global AI Bond Issuance Slumps to $23B in September; Morgan Stanley Sees Q4 Rebound

Global AI-related bond issuance fell to about $23 billion in September, the second-lowest monthly total this year, with U.S. investment-grade AI issuance dropping to zero, Morgan Stanley said. The bank attributed the slowdown to front-loaded borrowing, data center construction constraints and rising interest rates, calling it a pause rather than a reversal. Year-to-date global AI bond issuance reached $466 billion through September, more than double 2024's full-year $216 billion. Four hyperscalers — Alphabet (GOOGL), Amazon (AMZN), Meta (META) and Microsoft (MSFT) — issued roughly $132 billion in investment-grade debt, up about 25-fold year over year. Amazon raised 4.25 billion pounds in September across four tranches. SoftBank issued about $10 billion in high-yield debt, while Crusoe secured a roughly $500 million loan, bringing September leveraged AI financing to about $14 billion. Morgan Stanley expects Q4 issuance to exceed September levels but remain below the first half's pace. It noted the six largest hyperscalers' 2027 capital expenditure could reach about $1.4 trillion, above consensus of $1 trillion to $1.1 trillion, which would drive fresh financing demand. The bank cut its 2026 ABS and CMBS issuance forecast to $25 billion to $30 billion.