Komo: In 2027, the issuance scale of high-rated US bonds will reach 2.1 trillion US dollars, and the next 2 trillion dollars may become a “new normal”

The Zhitong Finance App learned that J.P. Morgan Chase said that large technology companies continue to increase artificial intelligence (AI) infrastructure construction, compounding the high demand for corporate refinancing, which will push the scale of US investment-grade bond issuance to a new record in 2027.

J.P. Morgan strategists, including Nathan Neil Rosenbaum, wrote in a research report released on Friday that the US supply of high-rated bonds is expected to reach 2.1 trillion US dollars next year, surpassing the historical issuance peak of 2 trillion US dollars expected this year.

The strategist added that as the market continues to expand, an annual issuance scale of 2 trillion US dollars or more may gradually become the norm.

J.P. Morgan estimates that technology and media companies will be the main players in new net issuance next year. The total amount of bonds issued can reach 612 billion US dollars, accounting for nearly 30% of the total supply of investment-grade bonds. Among them, hyperscale cloud vendors issued $225 billion in debt, and another $225 billion in financing transactions related to data center construction and computing power chips.

Rosenbaum pointed out, “The supply of bonds will be highly concentrated in the industry of financing AI infrastructure, which also makes our overall forecast highly sensitive to the AI capital expenditure cycle.”

Although the forecast predicts that the supply of M&A related bonds will drop sharply by 52% year over year after experiencing the big mergers and acquisitions year in 2026; however, strategists also suggest that a rebound in market risk appetite is an important upward risk, which may drive M&A transactions and the overall scale of debt issuance to exceed expectations.

On the other hand, the Democratic Party gained a seat advantage in several key states after the midterm elections. Resistance at the local approval and development level may slow down the implementation of data center projects in 2028, thereby suppressing the demand for technology companies to issue bonds. Furthermore, if hyperscale cloud vendors continue to shift debt issuance to foreign currency and reduce US dollar debt issuance, it will also impact the supply of US dollar bonds.

Currently, Wall Street investment banks are clearly divided over the prospects for issuing high-rated US bonds in 2027: TD Securities predicts that the issuance scale will soar to 2.4 trillion US dollars next year, reaching a new high; while Bank of America believes that as cloud vendors expand financing channels and mergers and acquisitions cool down, the issuance scale will fall back to 1.9 trillion US dollars.