How AI Debt Is Reshaping Credit Markets
Episode publishedPodcast: Goldman Sachs ExchangesGoldman Sachs Exchanges
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It's hard to overstate the importance of this seam in the credit markets, both in terms of its overall scale and the amount of supply, but also in the multi year nature of the issuance, which is something that the credit market hasn't always seen.
Tech companies have been turning to the bond markets to raise money for the AI buildout at an unprecedented scale. So how will this wave of borrowing reshape the markets? I'm Allison Nathan, and this is Goldman Sachs Exchanges. To discuss the scale of the shift and credit market implications, I'm sitting down with Amanda Lineham, who leads credit strategy research and Zach Ablon, who's on the front lines of our credit sales desk in global banking and markets. Amanda, Zach, welcome to Exchanges.
Thank you.
I think this is the first time both of you have been on in So the I'm looking forward to this conversation, very topical conversation, of course. Amanda, when we think about this topic, there's been a lot of focus on the equity issuance around supply the dominant theme in the credit markets. So tell us, our listeners, about why
that is.
That's right. First of all, thank you so much for having us. So it's hard to overstate the importance of this theme in the credit markets, both in terms of its overall scale and the amount of supply, but also in the multiyear nature of the issuance, which is something that the credit market hasn't always seen. In periods of releveraging in the credit markets, typically, it's been short lived maybe for an an industry that's engaging in debt funded M and A or an issuer that's doing a debt funded acquisition or even the bank's recapitalization of TLAC related supply a couple of years ago. This is
I do wanna to dig into some of those issues, but before we do, you did reference the fact that these are very cash rich companies. Let's just take a step back for a minute. Why are they turning to the bond market when they have a lot of cash?
Sure. This is a trend that actually started in 2025. These companies, the group of hyperscalers, issued $108,000,000,000 of debt globally in 2025. Fast forward to 2026 so far this year, they've issued $194,000,000,000 On paper, they still have cash on their balance sheet. They still have ample cash flow from operations compared to CapEx. But I think what they're doing is appropriately getting ahead of a multiyear investment cycle. Almost we think of it as a waterfall of capital, almost exhausting the depth of these different capital markets, debt, equity, their own internal cash flows to reall
And as you just mentioned, equity. They can issue debt. Talk to us a little about why one versus the other.
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