UBS lifts forecast for big tech bond sales this year

• UBS now expects aggregate capex spending by 'hyperscalers' to approach $770 billion for 2026, approximately 23% higher than previous forecasts, with public debt issuance potentially reaching $240 billion
• Tech bonds are projected to account for one-fifth of total U.S. investment grade issuance, which UBS raised to $1.8 trillion from $1.725 trillion
• Companies are increasingly tapping non-dollar markets for funding, exemplified by Alphabet's recent $31.51 billion global bond raise including Swiss franc and sterling denominations

UBS Lifts Forecast for Big Tech Bond Sales This Year

Key Forecasts:

UBS has significantly raised its 2026 U.S. tech investment grade bond issuance forecast to $360 billion from $300 billion, driving total U.S. investment grade debt issuance projections up to $1.8 trillion from $1.725 trillion. Tech bonds now represent approximately 20% of overall U.S. investment grade issuance. Conversely, the bank cut its U.S. leveraged loan forecast to $360 billion from $450 billion.

Main Drivers:

The revision stems from substantial capital expenditure increases announced by megacap technology companies including major cloud hyperscalers during recent earnings seasons. UBS now expects aggregate hyperscaler capex spending to approach $770 billion in 2026—23% higher than previous estimates. This could generate an additional $40-50 billion in hyperscaler public debt issuance, potentially reaching $240 billion total.

Market Implications:

Big tech firms are diversifying funding sources globally to finance AI data center expansion. Alphabet recently raised $31.51 billion globally, including bonds in Swiss francs and sterling, signaling a trend toward non-dollar markets. Late 2025 saw surging tech bond issuance for AI infrastructure funding.

However, investor concerns are mounting about whether heavy AI investments will generate sufficient returns, contributing to recent big tech stock declines. UBS lowered its leveraged loan forecast due to expectations that AI disruption risks are underpriced in leveraged loans and private credit markets, potentially widening spreads and dampening refinancing activity.

Bottom Line:

The report highlights a significant shift in corporate debt markets, with tech companies driving unprecedented bond issuance to fund AI infrastructure while traditional leveraged loan markets face headwinds from disruption concerns.