AI Is Pushing Corporate Bond Sales to an All-Time Record
Corporate bond sales just shattered a pandemic-era record, and the borrowing binge fueling AI hardware is starting to crack the credit markets in ways that could flip the entire trade on its head.
US investment-grade bond sales were on track to reach $1.76 trillion once deals priced on Monday, October 26, 2026. By Bloomberg’s count, that is an annual record. It tops the roughly $1.75 trillion borrowed during the 2020 pandemic boom, and money for AI is behind the jump.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA:LQD) hardly moved. It closed at $104.02, up 0.15%, even though a flood of new bonds usually pushes prices down.
Falling Treasury yields explain the calm. The 10-year yield was 5% on October 26, down from 5.31% on October 5.
A week before the record, issuers led by megacap tech had already sold about $1.7 trillion of investment-grade bonds. That was about 29% ahead of the same point in 2025.
When that much new debt comes to market, issuers have to offer higher yields to sell it, and older bonds lose value until their yields match. John Briggs, head of US rates strategy at Natixis North America, said: “If investors are seeing their AI-linked bonds losing value, they will be less interested in buying new bonds.”
New AI Deals Show Lenders Want Higher Rates
SpaceX (NASDAQ:SPCX | SPCX Price Prediction) signed a binding commitment for a roughly $40 billion equipment financing led by Apollo Global Management. An Apollo-managed entity will buy NVIDIA (NASDAQ:NVDA) GPUs and lease them to SpaceX for about five years. The money comes from privately placed Rule 144A bonds, which can be sold only to large institutions.
The deal has not priced or closed yet. The most expensive piece could carry a rate of up to 8.75%. On October 22, the expected rates for riskier pieces were about 8.3% and 7.75%. SpaceX’s most expensive bonds from June pay 6.65%.
Bank of America, Citi, Morgan Stanley and Blackstone lined up $63 billion for a new vehicle. It will buy Broadcom (NASDAQ:AVGO) gear and lease it to Anthropic starting in 2027. Two unnamed sources said the three banks are arranging about $43.5 billion of first-lien debt, the loans repaid first. Broadcom is offering lenders “residual value support,” and Moody’s warned that risk goes up if several deals like this happen close together.
Meta Platforms (NASDAQ:META) plans to sell up to $95 billion of stock. That includes $12.5 billion of mandatory convertible preferred shares that convert on August 15, 2029. Stock sales don’t count toward the bond record.
CoreWeave and Oracle Are Flashing Credit Warnings
On October 16, five-year credit default swaps on CoreWeave (NASDAQ:CRWV) rose above 1,100 basis points. These swaps are what the market charges to cover against a default. That level implies about 64% odds of default within five years. Oracle’s sat near 300 basis points, and swaps on Amazon, Alphabet and Meta hit record highs.
Kathleen Brooks, research director at XTB, said: “CoreWeave is quickly becoming the AI trade’s canary in the coal mine.” That warning rests on swap pricing, since none of these companies has defaulted.
LQD seems to be absorbing the pressure from every supply wave.
LQD holds $30.31 billion and yields 4.85%. Over the past 52 weeks, it has traded between $101.20 and $112.93, and its price is down 3.33% over the past year.
The fund has long duration, meaning its price swings a lot when Treasury yields move. Heavy issuance also widens spreads, the extra yield corporate bonds pay over Treasuries. As megacap tech keeps borrowing, AI-linked debt makes up more and more of the index.
The Fed announces its rate decision on October 28, with the top of its target range at 4.00%. A cut would likely lift LQD’s price and lower its yield. A hold that sends long-term yields higher would push its price down.
Key Levels That Will Decide LQD’s Next Move
LQD trades at $104.02, and its yield pays holders for owning long-term bonds from companies that keep borrowing more, while lenders already demand much higher rates to fund AI hardware.
Shorter-duration investment-grade funds and Treasury funds are worth researching for comparison, because both carry less exposure to rate moves and to the wave of AI borrowing.
Two price levels will show whether supply pressure is reaching the fund. If LQD closes below $101.20 before the SpaceX deal closes, the supply pressure has reached the fund. If LQD stays above $104.02 through year-end and the SpaceX pieces price below 8.3%, the supply pressure has likely eased.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
