AI-related debt financing is heating up, with 2026 global supply potentially reaching about $570bn
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AI-related debt financing is heating up, with 2026 global supply potentially reaching about $570bn
Morgan Stanley believes the AI and data center financing cycle is accelerating, with issuance hitting a year-to-date high in April and shifting to non-USD markets in May, while supply is likely to continue expanding in 2H26.
- As of May 31, 2026, AI-related global issuance was about $236bn, more than 4x the same period in 2025; full-year supply is forecast at about $570bn.
- AI-related issuance exceeded $74bn in April, the highest this year; data center shell construction project financing accounted for 85% of AI-related HY supply and 40% of IG supply.
- New issuance in the U.S. market was limited in May, but Hyperscalers issued about $24bn combined in non-USD markets such as EUR, CAD, CHF, and JPY, showing the investor base is expanding.
- The report believes fundamentals remain strong, but near-term price action is mainly driven by supply expectations; despite elevated supply, spreads across asset classes have generally tightened since the end of 1Q.
- Morgan Stanley is OW HY data center debt and believes data center securitized credit is attractive overall, with the strongest preference for ABS BBBs.
Report interpretation
Overview
This report tracks the AI-related debt financing cycle, covering publicly tradable debt across currencies including USD, EUR, GBP, CHF, CAD, and JPY. The core conclusion is that financing for data centers, Hyperscalers, and chips driven by AI infrastructure buildout is expanding from single-currency USD supply into multi-currency, multi-asset-class supply, and issuance may continue to accelerate in 2H26.
Core views
Morgan Stanley believes the fundamental support for AI-related financing remains solid, but current market pricing is more influenced by the supply pace and investor absorption capacity. Strong issuance in April, a slowdown in the U.S. market in May, and active non-USD issuance indicate that issuance windows and the investor base are rotating and broadening. HY data center debt is favored for its defensive credit characteristics, limited leasing risk, project-finance-style protections, and more attractive spreads; spreads on data center ABS and CMBS tightened in April and May due to a drought in supply, with ABS BBBs viewed as offering the most compelling value.
Analysis framework
The report combines cross-asset issuance tracking, supply technical analysis, structural credit term comparisons, and observation of securitization performance metrics. It compares AI-related debt instruments including IG, HY, leveraged finance, ABS, CMBS, and chip financing, while tracking issuance currency, issuance size, spreads, DSCR, cap rate, occupancy, and structural protection.
Methodology notes
Track publicly tradable AI-related debt supply by asset class and currency
The report breaks AI-related issuance down into IG, HY, securitized credit, and multi-currency issuance, with a focus on QTD, YTD, and full-year forecast supply.
Near-term pricing is mainly driven by supply expectations
The report believes fundamentals remain strong, but market pricing currently reflects supply pace, supply expectations, and investor absorption capacity more than fundamentals.
Assess securitized credit quality through DSCR, cap rate, occupancy, and triggers
The report notes that ABS DSCR has gradually declined but remains above trigger levels, cap rates have stayed stable, and reported securitized occupancy is above 90%.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- HY data center debtDirectly provides financing exposure to AI and data center construction
- Strengths
- Defensive credit characteristics, limited leasing risk, project-finance-style protection, and support from long-term Hyperscaler and neocloud demand.
- Weaknesses
- Still affected by construction progress, issuance supply, and single-project cash flow performance.
- Comparison
- The report explicitly rates HY data center debt OW and views its spreads as attractive.
- Risks
- Construction delays, spread pressure from increased supply, weakening tenant demand, or insufficient project-finance protections.
- Data center ABS and CMBSProvides securitized credit exposure through data center asset cash flows and collateral
- Strengths
- Spreads tighten when supply declines; ABS DSCR remains above trigger levels; cap rates remain stable; reported occupancy is above 90%.
- Weaknesses
- ABS DSCR is gradually declining, and CMBS DSCR is compressed in a higher-rate environment.
- Comparison
- The report believes data center securitized credit is attractive overall, with value most concentrated in ABS BBBs.
- Risks
- Spread widening if supply recovers, further DSCR compression, trigger pressure, and rates staying high.
- IG and corporate credit AI-related debtSupports Hyperscaler capex and large-scale AI infrastructure financing needs
- Strengths
- Issuers have strong financing capacity, and non-USD markets still have room to expand the investor base.
- Weaknesses
- Supply volumes are high, and near-term pricing is sensitive to supply expectations.
- Comparison
- The market has generally tightened since the end of 1Q, but the report believes technicals dominate pricing more than fundamentals.
- Risks
- Accelerating 2H26 supply, insufficient absorption in benchmark markets, and volatility in cross-currency issuance windows.
- Chip financing structuresProvide financing for AI computing hardware and chip-related assets
- Strengths
- Public and private market activity is increasing, existing deals have shorter tenors than some data center construction deals, and they use fully amortizing structures.
- Weaknesses
- Structures are still developing, with limited standardization and historical performance data.
- Comparison
- Relative to traditional data center construction financing, chip financing is more short-duration and amortizing in nature.
- Risks
- Technology iteration, changes in collateral value, transaction structure transparency, and investor acceptance.
- Non-USD Hyperscaler debtHelps large AI infrastructure issuers expand their investor base in EUR, CAD, CHF, JPY, and other markets
- Strengths
- Issuer representation in EUR/GBP benchmarks is lower than in USD, leaving room for further supply.
- Weaknesses
- Depends on regional market windows and cross-currency funding costs.
- Comparison
- U.S. market issuance was limited in May, but non-USD issuance was about $24bn, showing supply focus can rotate regionally.
- Risks
- Changes in FX and rate environments, insufficient absorption in non-USD markets, and concentrated issuance timing.
Key data
- 2026 AI-related global supply forecastabout $570bnThe report expects issuance to accelerate in 2H26.
- YTD issuance as of May 31, 2026about $236bnMore than 4x global AI-related issuance in the same period of 2025.
- April AI-related issuance>$74bnThe highest single-month supply this year.
- Share of data center shell construction project financingHY 85%; IG 40%Refers to the share of project financing structures within AI-related HY and IG supply.
- May Hyperscaler non-USD issuanceabout $24bnCurrencies include EUR, CAD, CHF, and JPY.
- HY data center issuanceabout $42bn since 2H25; about $27bn YTDProvides exposure to AI and data center construction.
- Data center securitized credit supplyOnly one ABS and one CMBS transaction each in April and MayReduced supply drove spread tightening.
- Securitized data center occupancy>90%The report says reported securitized occupancy is above 90%.
- Data center ABS DSCRStill above trigger levelsAlthough DSCR has gradually declined as issuers expanded master trusts.
Impact & implications
AI infrastructure financing is moving from early thematic issuance into a broader credit market cycle. For investors, accelerating supply may bring spread volatility, but it also offers multi-asset opportunities to access the data center, Hyperscaler capex, and chip financing chain. The report prefers HY data center debt with structural protection and higher spread compensation, as well as lower-rated ABS BBBs within data center securitized credit.
Risks
- Supply expectations are the main driver of current price action; if issuance accelerates in 2H26, spreads may come under pressure again.
- Data center project financing carries construction delay and completion risks, although mitigants include guarantees, debt service reserves, amortization requirements, and lockboxes.
- ABS DSCR is gradually declining, and CMBS DSCR is compressed in a higher-rate environment, requiring continued monitoring of trigger levels.
- Chip financing structures are still relatively new, so the stability of tenor, amortization, collateral value, and investor demand should be monitored.
- Morgan Stanley discloses that it may have business relationships with covered companies, and investors should treat this research as only one factor in investment decisions.
What to watch
- Whether AI-related global issuance in 2H26 accelerates toward the report's forecast of about $570bn in full-year supply.
- Whether Hyperscaler cash capex exceeds $1tn in 2027 as estimated by the equity research team.
- Whether Hyperscaler issuance in non-USD markets such as EUR, CAD, CHF, and JPY can continue expanding the investor base.
- The pace of new data center ABS and CMBS issuance, as well as changes in spreads, DSCR, cap rate, and occupancy.
- The number of chip financing deals, tenor, fully amortizing structures, and investor demand.
- Whether the relative value of ABS BBBs and HY data center debt remains attractive after supply recovers.