AI Capex Boom Reshapes Credit Into Buyer's Market | Apollo Credit Outlook

What's New

John Cortese, Partner and Co-Head of Corporate Credit at Apollo Global Management, argues in the firm's 2026 Credit Outlook that the technical backdrop defining credit markets has fundamentally shifted, as $1.5 trillion in announced hyperscaler capex and reviving M&A activity are flooding markets with new issuance—transforming what was a seller's market into one that rewards disciplined buyers with the broadest opportunity set in a decade.

Why It Matters

The convergence of AI infrastructure buildout and dealmaking resurgence is creating a structural reset in credit markets, where real-money demand can no longer absorb every deal and the composition of investment-grade indices will dramatically change as tech giants become dominant issuers.

Big Picture Drivers

• AI supercycle: Hyperscaler capex programs are generating $300-400 billion in annual debt financing needs, reshaping corporate credit fundamentals

• M&A resurgence: Lower financing costs and favorable regulation have reignited deal activity, with record volumes in technology, media, and communications

• Technical shift: IG yields drifting below 4.75% as supply outpaces demand absorption

• Concentration risk: AI-driven market concentration is elevating credit correlations while default risk diverges between high-grade and leveraged names

• Index transformation: Major tech issuers moving from index obscurity to top-10 positioning by 2030

By The Numbers

• $1.5T: Announced hyperscaler capex over next five years across Google, Meta, Amazon, Oracle, Microsoft

• 40%: Year-over-year increase in LBO volume in late 2025

• $2T: Estimated total US IG issuance for 2026

• 7-7.5%: Current average leveraged loan cost, down from ~10%

• ~10%: Sports franchise loan-to-value ratios despite record valuations

Key Trends to Watch

• Index recomposition: Google could move from 212th to top-10 largest US IG issuer by 2030, establishing a new quasi-"risk-free" spread floor at roughly 5% yields.

• Cross-asset complexity: Major corporates are diversifying funding across commercial real estate, asset-backed, and private credit markets—requiring integrated risk analysis.

• Sports financing opportunity: Underlevered franchises with record valuations present openings for hybrid and private capital structures.

• European expansion: Private credit continues double-digit growth across direct lending and asset-backed strategies in 2025.

The Wrap

Apollo's message is clear: credit markets are entering a phase where scale, origination capability, and underwriting discipline matter more than riding technicals. Winners will integrate AI disruption analysis into credit decisions, pursue uncorrelated sectors, and maintain rigorous standards as the market fragments between high-grade safety and leveraged vulnerability.