Corporate issues linked to artificial intelligence already represent 14% of the high-quality debt market.
The corporate debt linked to artificial intelligence (AI) reached a historical record of US$1.2 trillionconsolidating itself as the largest segment within the investment grade market, according to a report by investment bank JP Morgan.
This figure reflects the growing weight of AI companies, which today represent 14% of the high quality debt marketcompared to the 11.5% they had in 2020. With this jump, the sector even surpassed the traditionally dominant US banks, which now account for 11.7% of the JP Morgan US Liquid Index (JULI).
AI corporate debt soars
The agency’s analysts, including Nathaniel Rosenbaum and Erica Spear, identified 75 companies from sectors such as technology, public services and capital goods closely linked to AI.
Among them are Oracle, Apple and Duke Energyhighlighted for their great liquidity, low leverage and intense bond issuance activity. Currently, this debt is trading with a spread of 74 basis points, ten points below the JULI index, reflecting investor confidence.
The enthusiasm around artificial intelligence, unleashed after the arrival of ChatGPT three years ago, skyrocketed the stock market valuations of large technology companies and fostered a voracious appetite for your debt.
jp morgan
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An example of the situation is the recent placement of Oracle, which raised $18 billion in September. The operation, the second largest this year in investment grade, attracted a demand of US$88,000 million and demonstrated the strong competition between banks and private funds to finance the development of gigantic data centers.
Companies in the sector are not exempt from risks
Despite this solidity, analysts warn that high exposure to AI is not without risks. An eventual correction in the shares of technological megacorporations could be transferred to credit, especially if the firms allocate their liquidity to acquisitions or large projects before repaying their debt.
Still, JP Morgan maintains that, fundamentally, most of these companies maintain solid and highly regulated financial profileswhich supports its adjusted prices in the market.
In this scenario, the bank suggests that certain coverages, such as short positions in CDScould serve as additional protection against possible tensions in the sector.
Source: Ambito
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