UBS Raises 2026 Tech Bond Issuance Forecast to $360 Billion as AI Capex Accelerates
UBS Global Credit Research has revised its 2026 U.S. fixed-income outlook, sharply increasing projections for investment-grade technology bond issuance while trimming expectations for leveraged loans.
Key Takeaways
- UBS raised its 2026 U.S. investment-grade tech bond forecast to $360 billion, up 20% from prior estimates.
- Total U.S. IG issuance is now projected at $1.8 trillion, with tech representing roughly 20% of the market.
- Hyperscaler AI capital expenditures are expected to reach $770 billion in 2026.
- UBS cut its U.S. leveraged loan forecast to $360 billion amid widening credit risks in lower-rated sectors.
The February 18 note highlights a structural shift in corporate financing dynamics, with large technology companies turning more heavily to bond markets to fund data center expansion and AI infrastructure buildouts.
Investment-Grade Tech Debt Takes Center Stage
UBS now expects U.S. investment-grade (IG) technology bond issuance to reach $360 billion in 2026, up from its previous $300 billion forecast. That adjustment represents a 20% upward revision and implies that technology could account for approximately one-fifth of total U.S. IG issuance.
UBS RAISES BIG TECH BOND OUTLOOK, CUTS LOAN FORECAST
UBS lifted its 2026 forecast for U.S. investment-grade tech bond issuance to $360 billion, up from $300 billion, citing surging AI-driven capital spending by megacaps including Meta Platforms, Amazon and Alphabet.
That pushes… pic.twitter.com/ArkFO3qtDP
— *Walter Bloomberg (@DeItaone) February 18, 2026
Overall U.S. IG issuance is projected at $1.8 trillion, compared with earlier expectations of $1.725 trillion. The upward revision underscores the increasing reliance of large-cap technology firms on bond markets to finance capital-intensive AI infrastructure expansion.
Recent multi-currency bond offerings by major technology companies illustrate the scale of funding activity required to support next-generation compute platforms and global data center construction.
AI Capital Expenditures Drive Funding Needs
UBS estimates hyperscaler capital expenditures will reach approximately $770 billion in 2026, representing a roughly 23% increase from prior projections. This surge reflects ongoing investments in GPU clusters, advanced networking systems, power infrastructure, and cooling capacity needed to support large-scale AI model training and inference workloads.
Within this framework, UBS expects hyperscalers alone to account for $230–$240 billion in public debt issuance next year, with an additional $40–$50 billion potentially required following recent upward revisions to AI spending plans.
While investor demand for investment-grade tech bonds remains strong, UBS notes that capital expenditures are consuming a significantly larger share of operating cash flow than historical norms. In some cases, AI-related capex may approach or exceed 100% of annual cash flow, compared with long-term averages closer to 40%.
Leveraged Loan Outlook Trimmed
In contrast to its upward revision for IG technology bonds, UBS reduced its 2026 U.S. leveraged loan forecast to $360 billion from $450 billion. The adjustment reflects concerns that AI-driven disruption may pressure credit fundamentals in lower-rated sectors, potentially widening spreads and dampening refinancing activity.
Companies operating outside the core AI ecosystem could face margin compression or competitive displacement, limiting their ability to access leveraged credit markets on favorable terms.
UBS left its U.S. high-yield bond forecast unchanged at $365 billion, as well as its European investment-grade and high-yield projections.
Structural Shifts in Corporate Funding
The divergence between technology investment-grade issuance and leveraged loan activity highlights evolving corporate funding patterns. Large-cap technology companies with strong balance sheets and credit ratings are tapping public bond markets to fund expansion, while riskier borrowers face more constrained conditions.
Market surveys indicate mixed investor sentiment regarding the sustainability of AI capital expenditures. While many view the spending surge as foundational for long-term earnings growth, a subset of investors has raised concerns about potential overinvestment and execution risk.
Nonetheless, UBS maintains that AI-related investment will continue to underpin technology sector earnings growth into 2026, projecting roughly 12.5% expansion next year.
Implications for Credit Markets
For fixed-income investors, the forecast suggests increased supply of high-quality technology debt alongside selective pressure in leveraged credit segments. Elevated issuance volumes could offer additional yield opportunities within investment-grade portfolios, though sustained capex intensity may warrant closer monitoring of leverage metrics.
At a broader level, the revisions underscore how artificial intelligence investment is reshaping capital markets. Bond markets are becoming a primary channel through which hyperscalers finance large-scale infrastructure commitments, reinforcing technology’s dominant share of U.S. corporate debt issuance.
As AI buildouts continue, the balance between growth financing and credit discipline will remain central to market stability in 2026.
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With over 6 years of experience in the world of financial markets and cryptocurrencies, Teodor Volkov provides in-depth analyses, up-to-date news, and strategic forecasts for investors and enthusiasts. His professionalism and sense of market trends make the information he shares reliable and valuable for everyone who wants to make informed decisions.
