Prof G Markets · Wednesday, July 29, 2026
Companies building AI infrastructure are increasingly relying on debt financing rather than equity, leading to a significant increase in investment-grade credit supply in the hyper-scaler space. This has caused credit spreads on their debt to widen, prompting questions about their underlying creditworthiness and the payoff timeline for AI investments.
“The challenge at the moment is that the hyper scalers and those who are building the infrastructure, they are changing their financing with what used to be mainly from the equity side of the balance sheet to now being on the debt side of the balance sheet.”
“And the consequence of that is that we have started to see spreads in credit widen out on that hyper scaler debt.”
“So, one way of answering your question is that there's simply so much debt that has come to the market and the market has now begun to ask some questions around, well, if these companies need all this financing, what is the right interest rate, what is the all-in level of yield that is required to finance the build out the way that we're seeing at the moment?”