A roughly $1 trillion wave of capital expenditure tied to artificial intelligence is poised to expand bond supply, keeping fixed-income markets turbulent as cloud giants race to secure funding, according to the head of Asian fixed income at Robeco.
In an interview on Wednesday, Thu Ha Chow noted that AI hyperscalers, given the sheer scale of their buildouts, show "almost no price sensitivity" to financing costs. This dynamic is pushing up the supply of longer-dated bonds at the same time governments in the U.S., Japan, and other regions are also issuing debt.
A substantial portion of these outlays is expected to be channeled through the bond market, Chow said, adding that attractive spreads offered by highly rated borrowers are luring yield-focused investors away from assets like U.S. Treasuries.
"We still believe there is up to $1 trillion of capital expenditure projects underway that need financing," Chow stated, noting that most of this funding appears to be coming from debt markets for now. However, she suggested that diversifying some of the financing toward equities could help ease part of the pressure on bond supply.
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