LIVE MARKETS-AI debt machine hits half-trillion stride

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AI DEBT MACHINE HITS HALF-TRILLION STRIDE

The numbers are hard to ignore. Global fixed income issuance tied to artificial intelligence is already near $250 billion this year, surpassing the entirety for 2025, and analysts say the real wave hasn't even crested yet.

Morgan Stanley is now penciling in $500 billion of AI and data-center-related supply across U.S. fixed income markets in 2026 - split across $400 billion in investment grade, $65 billion in leveraged finance, and $35 billion in securitized credit.

An additional $50 billion of IG hyperscaler paper has already landed in overseas markets, with up to €50 billion of euro-denominated issuance still forecast for the year.

The fundamental backstory is strong: demand for compute keeps climbing while the market remains structurally short on power.

But the analysts led by Carolyn Campbell say the technical story - lumpy issuance calendars, shifting investor appetite, crowding dynamics - is likely to be the primary driver of prices over the next 12 months.

Construction risk and structural differences between deals are also on the radar. The bank is underweight IG tech and overweight high-yield data centers - a sign the market is starting to discriminate rather than simply buy the theme wholesale.

For those willing to go down the capital structure, the most compelling relative value opportunity is seen in Data Center ABS BBBs, Morgan Stanley said.

(Karen Brettell)

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EARLIER ON LIVE MARKETS:

THE MORTGAGE SEE-SAW: RATES RISE, APPLICATIONS FALL CLICK HERE

130 YEARS OF THE DOW: FROM 40 POINTS TO 50,000 CLICK HERE

US STOCKS TICK UP, ENERGY SINKS AS AI TRADE COOLS CLICK HERE

BENCHMARK TREASURY YIELD BREAKOUT FAILS, RANGE REASSERTS CLICK HERE

EUROPEAN STOCKS NEED LOWER OIL PRICES CLICK HERE

PENSIONS PIP UK PROPERTY FOR RETURNS CLICK HERE

DON'T WORRY ABOUT THE IPO WAVE CLICK HERE

ANOTHER GREEN DAY CLICK HERE

EUROPE BEFORE THE BELL: RUNNING HOT CLICK HERE

MARKETS CHEER, CENTRAL BANKS WARN CLICK HERE


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