Global investment-grade corporate bond spreads hit a one-and-a-half-year high as the AI financing wave rattles the credit market.

Global credit markets are sending the strongest risk-off signal in more than a year. The prospect of technology companies taking on massive debt to build out artificial intelligence, combined with rising oil prices and political turmoil in France, has pushed global corporate bond spreads sharply wider. Bloomberg index data show that global investment-grade corporate bond spreads surged to 129 basis points on Thursday, the widest level since May 2025. Meanwhile, the CDX investment-grade index, which tracks the cost of default protection on U.S. blue-chip corporate debt, rose to 64 basis points on Friday, hitting its highest level since March. Spreads on Asian high-grade dollar bonds also widened to their highest since July 2025, and heightened volatility forced the Export-Import Bank of Korea to postpone a yen bond issuance. The core market concern: tech giants led by Meta (META.US) are preparing unprecedented financing scale, while whether AI investment can be converted into profits in time remains unknown. David Del Vecchio, co-head of U.S. investment-grade corporate bonds at PGIM Credit, said, "The market is digesting the shock from the potential issuance scale needed for AI buildout, and investors have little reason to step in proactively to fill the gap." Lakshmanan R, head of South and Southeast Asia corporate bonds at CreditSights in Singapore, said, "I think this is the beginning of a more sustained repricing of credit risk, the combined result of multiple global risks hitting the market in succession." Meta's massive spending plan ignites market concerns The direct trigger for this round of credit market turmoil is Meta's latest capital expenditure plan disclosed this week. Meta said in its quarterly filing that the company is considering raising "hundreds of billions of dollars" over several years starting this autumn. Its spending commitments have climbed from about $700 billion in July to about $825 billion. Meta also disclosed in the filing that its special committee regards locking in capital ahead of others as a strategic priority, because it needs to complete financing "before competitors fill up various financing channels," and described the current environment as "increasingly challenging financing conditions." That statement further intensified market concerns about technology companies concentrating their fundraising and crowding out a limited pool of capital. SpaceX borrows to buy chips, AI financing scale keeps setting records Technology companies' borrowing ambitions go beyond Meta. Musk's SpaceX (SPCX.US) is seeking to raise $40 billion to purchase chips from NVIDIA Corporation (NVDA.US), a move that would rank among the largest debt financings in the history of AI buildout. According to Semafor, citing people familiar with the matter, the financing rate will be higher than SpaceX's previous bond issuance, with lower-rated bonds priced at a rate of about 8.3%. Bloomberg Trace data show that as of Friday's close, the spread on SpaceX's 2046 bonds with a 6.6% coupon widened by 13 basis points to 279 basis points. According to data compiled by Bloomberg News, companies have raised more than $450 billion in global debt markets this year for AI-related spending. John Lloyd, head of global multi-sector and corporate credit at Janus Henderson (JHG.US) in Denver, expects total debt issuance for AI buildout next year could approach $1 trillion. Can the market absorb it? Divergence emerges Facing the coming $1 trillion financing wave, market participants are divided. Lloyd said the market should be able to absorb that scale, and investors are not entirely unprepared for the coming supply. But he also warned that market turbulence is inevitable: "The risks are widely known, so every data point can trigger volatility because it changes the market's weighting of those risks." A bigger divergence exists over the return on AI investment itself. Ken Griffin, founder of hedge fund giant Citadel, warned of bubble risk in AI; Blackstone (BX.US) President Jon Gray took the opposite stance, saying demand is "almost parabolic" and there is no need for excessive concern. It is worth noting that despite the widening, the absolute level of U.S. investment-grade corporate bond spreads remains in a relatively low historical range, with 87 basis points clearly below the roughly 109 basis point average of the past decade, indicating the market as a whole has not yet fallen into panic. Strong earnings may ironically become a risk factor A rather ironic market logic is taking shape: the more money technology companies make, the more investors may worry. Meta and SpaceX both reported results this week that beat analysts' average expectations, highlighting that these heavy borrowers can already generate excess profits before large-scale investments such as data centers are fully operational. However, Travis King, head of U.S. investment-grade corporate bonds at Voya Investment Management (VOYA.US), raised a warning. He said, "At the index level, spreads are still narrowing, but beneath the surface it is a mess. If tech stock earnings bring good news, the only implication may be that they will further expand their spending plans." This means strong earnings will not only fail to calm market concerns, but may instead set the stage for the next, larger wave of borrowing. This article is reprinted from "Wall Street Insights," author: Yang Chen, GMTEight editor: Li Cheng.