The funding pipeline for lower-rated artificial intelligence developments has slowed to a halt, with no new high-yield bond deals in the sector since late October. Credit risk for AI projects has surged, sending high-yield spreads to about 425 basis points, their widest level in at least two years and roughly 200 basis points above non-AI debt of a similar rating. Investment-grade AI spreads also climbed to approximately 140 basis points as lenders grow more selective due to concerns over permitting delays and the massive capital expenditure required for data center buildouts.
The decline in high-yield appetite follows a period of record global borrowing, with total bond sales reaching an all-time high of $6.61 trillion this year. The five largest hyperscalers, including Meta, Alphabet, and Oracle, have issued about $218B in investment-grade bonds in 2026, more than doubling their total for 2025. While some banks report a growing reluctance to fund further AI ventures, the sector’s largest players continue to access the market; Microsoft raised $25B on Nov 4 via a 10 tranche bond offering.
