AI Supply Slows, Spreads Keep Widening

The Rithm Take

Bottom Line: AI-related borrowing has paused since August, but pricing for Technology and Communications credit has kept moving wider, most of all at long maturities.

AI-related borrowing has become one of the largest and longest-dated sources of IG supply. Technology and Communications together are 17.5% of 2026 USD IG issuance, double their 2024 share. At each sector’s own mix, 28% of Technology supply and 45% of Communications supply is ten years or longer, against 22% for the market overall.

Issuance has slowed as investors have shifted towards prioritizing capital discipline. The five hyperscalers have not issued since $25bn in August, and Technology supply through October 27 is running at about half the pace of the same days in September. Spreads have not eased with it. Technology widened 14bp and Communications 21bp in October, more than twice the 6bp move in IG overall. The market is asking for more spread to hold the next wave, consistent with the view that hyperscaler issuance is structural through 2026 and 2027.

Market Signals

Technology supply is up 65% from 2025 and Communications has tripled. Hyperscaler issuance is five times its 2025 level. Technology supply fell from $36bn in August to $13bn in September among index members, and to $6bn through October 27 from $12bn over the same days in September across all USD IG. Hyperscaler supply was $25bn in August and zero in September and October. Watching: whether supply restarts into year-end, and at what spread.

The spread range across the five issuers has widened from 98bp to 220bp at year-end to 109bp to 322bp today. The two issuers that started the year widest account for the widest moves. Volume issued does not rank the widening. The largest borrower year to date has widened less than the two with $25bn each.