The AI infrastructure arms race is driving global credit markets into an unprecedented stress test.

From Broadcom raising tens of billions of dollars for Anthropic and OpenAI, to SpaceX seeking $40 billion in loans to purchase Nvidia chips, to Oracle holding closed-door financing talks with Apollo and Goldman Sachs, the AI debt wave is sweeping through credit markets at a stunning pace. Meanwhile, U.S. Treasury yields have broken above 5.3%, and the CDS market has already sounded the alarm 鈥?just how long can this frenzy last?

According to Bloomberg, Broadcom has just completed the settlement of a $60 billion debt financing raised for Anthropic, with banks having sent syndication invitations to investors for $42 billion in Class A senior secured debt, while a Blackstone-led $18 billion Class B subordinated debt tranche has also been put in place. Broadcom immediately launched its next round of arrangements 鈥?according to people familiar with the matter, the company has begun preliminary discussions on a financing plan to help OpenAI purchase custom AI chips. Bloomberg's latest report indicates early discussions are in the range of approximately $30 billion; The Wall Street Journal previously cited sources suggesting the figure could reach as high as $50 billion. The two figures remain at odds, and the final size is still to be confirmed.

At the same time, SpaceX has approached banks and investors seeking $40 billion in borrowing to buy Nvidia chips, a transaction expected to be completed as early as 2027, according to Bloomberg.

Credit markets have already raised the alarm. Paramount's CDS spread has surged to its highest level since the global financial crisis; SpaceX bonds have fallen to record lows, with its 2056-maturity bond quoted at around 85 cents and its spread approaching junk-grade levels; Oracle's entire credit curve has collapsed once again, with bond yields hitting record highs; Meta's bond issuance for the Project Beignet data center project 鈥?the largest single corporate bond offering globally 鈥?has also fallen to historic lows. The 10-year U.S. Treasury yield touched a multi-decade high of 5.36% before hovering in the 5.27% to 5.30% range, the highest level since 2002.

Borrowing Wave: Unprecedented in Scale

Starting from near zero, tech industry debt financing has accumulated to approximately $500 billion in the first nine months of this year. Giants including Google, Meta, Amazon, and Microsoft have borrowed heavily to pay for chips, servers, and data centers. Goldman Sachs estimates that this figure will climb further to $1.2 trillion by 2027.

Chris Della Fave, Senior Vice President at Post Oak Group, estimates that AI now accounts for 25% of all corporate bond issuance, up from just 4% two years ago. Adjusted for inflation, the AI industry's expected borrowing in 2026 will exceed the total financing during the cable operators' buildout of the entire internet, or the great U.S. railroad expansion of the 19th century.

Deal structures continue to innovate to cater to investor tastes.

According to Bloomberg, SpaceX plans to raise approximately $10 billion in bank loans and $30 billion in investment-grade bonds, led by Apollo 鈥?even though its bond spreads are already near junk-grade levels. Some investors who were approached said they received only a two-page memo with space imagery and a "data center somewhere in the cosmos" plan, but the "AI" label alone was enough to push the financing forward.

CDS and Credit Cracks: The Alarm Has Been Sounded

Equity markets appear calm on the surface, but credit markets are already churning beneath.

The CDS market was the first to reflect multiple stress lines. Paramount's CDS spread has exploded to its highest level since the 2008 financial crisis; SpaceX bonds fell to record lows in a single day; Oracle's entire credit curve bond yields have set new all-time records; Meta's Project Beignet bonds 鈥?seen as a proxy for the entire data center industry 鈥?have also fallen to historic lows.

According to Goldman Sachs data, investment-grade credit spreads have been essentially flat since early September, with investor long positioning near record highs, and the high-grade credit market has yet to show significant loosening. But deeper risks have been accumulating: JPMorgan statistics show that $65 billion in leveraged loan transactions are trading below 60 cents on the dollar (deeply distressed territory), with the tech sector accounting for 39% of distressed loans, and software companies facing a refinancing wall of over $100 billion. Spreads on the lowest-rated CCC bonds have breached 1,000 basis points for the first time since the 2023 regional banking turmoil.

Goldman Sachs' credit volatility chart shows that expected credit spread volatility is currently lower than that of equities, rates, foreign exchange, and gold, appearing relatively calm 鈥?but this calm comes precisely as borrowers are queuing up for tens of billions in AI financing. MacroVisor analysis suggests that protection against widening spreads is currently unusually cheap, and credit markets 鈥?not equity markets 鈥?will be where the first crack in the AI financing cycle appears.

5.3% U.S. Treasuries: The Resonance Board of Systemic Stress

The AI debt wave is not single-handedly driving rates higher, but it is creating a compounding effect on an already-stressed U.S. Treasury market.

The 10-year U.S. Treasury yield has climbed above 5.3%, the highest level since 2002. The latest auction cleared at a yield of 5.30%, the highest since November 2000, and although the auction ultimately exceeded expectations, the issue price was 1.7 basis points below the secondary market 鈥?the largest "tail" in over a year.

Mark Malek, Chief Investment Officer at Siebert Financial, noted that investors who might otherwise have bought U.S. Treasuries may now choose to buy bonds from tech giants like Microsoft instead, and this structural shift is pushing up the U.S. government's borrowing costs. Chris Della Fave said that even if geopolitical conditions and oil prices stabilize, "I don't think yields will fall significantly, because the impact of AI debt is already here."

Rate pressure is already spreading. In the eurozone, the France-Germany spread has widened back to 140 basis points; EUR/USD is hovering near a 17-month low around 1.12; higher dollar rates are also spilling over into emerging markets 鈥?the Reserve Bank of India has raised its repo rate by 25 basis points to 5.50%, its first hike since February 2023.

Bubble Debate: Capital Allocators Are Already Choosing Sides

The debate is no longer confined to market strategists. Dalio recently said in Singapore that AI is a classic bubble that will eventually be pricked by persistently rising interest rates. Temasek's investment head called a reversal in the AI trade the biggest market risk of 2027, and the fund plans to increase the proportion of publicly tradable assets in its AI holdings from about 50% to 70%-75% so it can exit quickly if necessary.

Bank of America strategist Michael Hartnett noted that historically, most bubbles peak when the leading sector's market capitalization reaches about 40% of total U.S. equity market value, and the top ten AI companies currently account for 42%. He cited the railroad industry as an example 鈥?railroad stocks once exceeded 60% 鈥?hinting that the rally may not necessarily end here, but it is hardly a comforting precedent.

The Bank of England's Financial Policy Committee warned at the end of September that "the risk of a larger adjustment remains," especially once market doubts about the pace of AI development or adoption begin to hit earnings expectations.

Oracle is viewed by some market participants as a barometer for the entire AI financing space: its debt has reached $125 billion, its cash reserves are shrinking quarter by quarter, and its Project Lighthouse data center project in Wisconsin has reportedly been delayed. Malek warned that if Oracle encounters debt repayment problems, it "could trigger a chain reaction across the entire AI financing space."