Credit investors have proven resilient to political uncertainty while happy to take up the promised future view of AI application. As a result corporate issuers were able to access capital continuously via the public debt markets in the US and Europe in 2025. Despite all of the potential turbulence of US tariff, war in the Middle East, stubbornly persistent inflation and wider geopolitical concerns.
“US investment-grade issuance in September reached US$200 billion, surpassing the previous record of $170 billion in September 2024,” noted Chris Fenske, head of capital markets research, Primary Markets Group, S&P Global Market Intelligence, in his latest paper, ‘See the Big Picture: Credit Markets’.
“Total US issuance through the third quarter 2025 was 3% higher year over year at US$1.63 billion,” he writes. “To date, there have been no signs of tariff-related capital flight from US Treasuries, with positive official net inflows to official holdings. Issuers and investors appear to be comfortable, with rates among intermediate maturities hovering almost exactly in the middle of historical ranges. Ten-year US government bond yields closed the third quarter at 4.16%, only 2 basis points below the daily median yield since 1990.”
Corporate debt moved to shorter duration, he added, as coupons fell with interest rates falling.
“Average maturities for AA-rated US dollar-denominated corporate bond issues declined by approximately 2.1 years to 8.6 years and A-rated maturities shortened by 1.5 years versus 2024 to 9.3 years. Issues rated BBB- to B were within one year of the prior year’s level,” he noted. “Average coupons declined less than 10 bps for most ratings cohorts compared to 2024, except for BB-rated new issue coupons, which declined 32 bps.”
Despite concern around the an artificial intelligence bubble, investors were still hungry for AI-based credit.
“Technology companies’ AI-fueled bond issues have been a major contributor to this year’s US bond issuances, with the sector comprising almost 9% of total issuances through the third quarter from about 6% in the same period in 2024,” he said. “The second-largest US bond issued in the first nine months of the year was Oracle’s $18 billion offering, priced in late September. Proceeds will largely be applied to ramp up the cloud infrastructure needed to support the massive data storage and processing requirements of the company’s AI clients.”
However he cautioned that signs of an economic slowdown or likely curbs on in spending would hurt debt issuance going forward and pressure credit spreads for highly levered borrowers in the AI supply chain.
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