① Citadel Securities analysts estimate that over $500 billion in additional debt will emerge in global public and private credit markets by 2028 to support chip procurement and infrastructure development; ② the research team noted that such a large-scale new debt supply could reshape portfolio allocations, potentially prompting investors to reduce their holdings of TMT-sector bonds.
According to Caixin Global on August 4 (Editor: Zhao Yao), record-breaking borrowing driven by the data center financing boom may have pushed credit markets close to their capacity limits, yet tech companies show no signs of slowing down their fundraising activities.
Citadel Securities LLC forecasts that by 2028, public and private debt markets will see more than $500 billion in new debt issuance to finance chip purchases required for artificial intelligence (AI) campuses.
Jeff Eason, Head Analyst at Citadel Securities’ investment-grade bond trading desk, stated that by 2028, this amount would represent over 5% of the size of the Bloomberg U.S. Investment Grade Corporate Bond Index.
He expects that most of these debt issuances will have relatively short maturities—around three to five years—to align with the useful life of chips; some of the financing may be executed through Rule 144A private placements.
“This could become one of the largest new sectors in the investment-grade credit market,” Eason said in an interview. “Its scale is unprecedented relative to the current market size.”
To date, global markets have already absorbed approximately $570 billion in AI-related debt, the majority of which has come from so-called 'hyperscalers,' including Amazon, Microsoft, and Alphabet, Google’s parent company.
These companies are building large-scale data centers at an unprecedented pace. Since last year, the U.S. market alone has absorbed roughly $60 billion in short-term debt from these cloud computing giants, with maturities of up to about five years.
Eason projects that chipmakers alone could issue more than $250 billion in debt in 2028, adding, “Investors have never faced financing demands of this magnitude before.”
Currently, leading AI firms such as Anthropic and OpenAI are aggressively scaling their operations through substantial cash burn and increasingly relying on various debt structures and guarantees from large corporations to access the investment-grade bond market—one of the deepest and most liquid corporate funding markets.
Earlier this year, Anthropic secured a financing package of approximately $35 billion to purchase custom-designed TPU chips from Google, marking one of the largest private credit transactions in history. Broadcom provided payment guarantees for the largest tranche of senior debt, enabling Wall Street banks to trade portions of this debt.
Citadel launched its investment-grade credit business in early 2024, and according to Sam Berberian, the firm’s Global Head of Credit Trading, the nominal volume of transactions executed by this business last year was approximately $500 billion.
Eason and his team noted that such a large-scale new issuance of debt could reshape the structure of investment-grade credit portfolios, potentially requiring investors to reduce their holdings of bonds in the technology, media, and telecommunications (TMT) sectors to make room for debt related to chip financing.
Eason stated, 'This is not just a financing story. It could fundamentally alter the composition of the investment-grade market, creating a new benchmark sector while affecting credit spreads, portfolio construction, and capital allocation across the entire AI ecosystem.'
Editor/Liam