The chart
Rising issuance – driven by the tech sector – is shifting supply/demand dynamics in the giant US investment-grade market
Source: JP Morgan. Ninety One, November 2025.
The context
The rise of artificial intelligence (AI) has dominated financial market headlines for months, with the seemingly unstoppable equity rally sparking valuation-bubble concerns while intensifying fears over market concentration. But AI is an altogether different story for the credit asset class.
While cashflows and reserves have financed much of the recent AI-related capital expenditure, tech companies are increasingly turning to credit markets for funding, resulting in an accelerated pace of credit issuance – with 2025 already setting records. As this issuance is investment grade and dominated by highly rated, cash-generative issuers, credit quality is not a key concern here. But the supply/demand balance is tipping.
For several years, the combination of reduced new issuance (after the records set in 2020) and strong investor demand – thanks to the high yields on offer – has provided a strong ‘technical’ support for the overall market. But both factors look set to shift: tech-sector issuance will increase supply, while a fall in yields may temper demand, as noted here. Combine this with credit spreads that have been anchored at historically low levels, and investors should brace for relativity higher credit spread volatility in the major US investment-grade credit market, regardless of the fact that these are good quality issuers.
The conclusion
With a shift in volatility regime likely in the investment-grade market, investors should take a bottom-up approach and look to capitalise on mispriced risk opportunities. Investors with the flexibility to explore the wider credit market universe can find a more favourable technical backdrop in specialist segments such as the loan market, bank capital, and select parts of the high-yield market.
