AI Boom Brings Flood of Debt to Ultrasafe Markets: Credit Weekly

The artificial intelligence gold rush is no longer just a story about soaring stock prices. According to a new Credit Weekly report from Bloomberg, the frenzy to build AI infrastructure has spilled over into the bond market, flooding traditionally "ultrasafe" sectors with a historic wave of new debt.

As of December 20, 2025, analysts are warning that the race to power the AI economy is transforming the risk profile of utilities and investment-grade corporations, forcing conservative investors to reassess what "safety" looks like in a market leverage-heavy on future promises.

The "Boring" Market Wakes Up
For decades, utility bonds were considered the bedrock of a safe portfolio—boring, predictable, and stable. That dynamic is shifting. To meet the voracious energy demands of AI data centers, utility companies are borrowing at record levels to upgrade aging power grids and build new generation capacity.

Surge in Issuance: JPMorgan Chase & Co. forecasts an 8% jump in utility bond issuance for the coming year, a massive increase for such a mature sector.

The Driver: A single AI data center can consume as much electricity as 50,000 homes. Utilities are forced to front-load capital expenditure (CapEx) to prevent blackouts, funding these projects through debt that will take decades to pay off.

"Hyperscalers" Dominate
The report also highlights the aggressive borrowing habits of Big Tech "hyperscalers" (companies like Meta, Oracle, and Microsoft). These firms are now dominating the investment-grade market, displacing banks which were historically the largest borrowers.


Jumbo Deals: Recent months have seen "jumbo" bond sales, including a $30 billion offering from Meta and an $18 billion deal from Oracle, as companies lock in cash to buy Nvidia chips and build server farms.

Rising Risk Premiums: While these companies are cash-rich, the sheer volume of debt is making lenders nervous. The cost to buy protection against a default (credit default swaps) on some tech giants has nearly doubled since September, signaling that the market sees growing risk beneath the surface.

The Warning Signs
The Bank of England and other financial watchdogs have recently flagged this trend as a potential stability risk. The concern is a classic "asset-liability mismatch": companies are issuing 30-year bonds to pay for AI technology that might become obsolete in four years.


"The AI gold rush is increasingly being underwritten by borrowed money," noted one credit strategist. "If the high-growth earnings forecasts for 2027 and 2028 do not materialize, we are looking at a lot of debt servicing with no revenue to back it up."