In the current uncertain economic environment, navigating complex capital and credit market conditions has become a core pillar of effective corporate stewardship. Boards of directors (responsible for enterprise-wide risk oversight) and management (in charge of day-to-day operations) are faced with increased challenges, tackling variable interest and inflation rates, expanding artificial intelligence (AI) related pressures, renewed investor scrutiny and persistent macroeconomic uncertainty, all of which heightens the importance of building a resilient balance sheet and maintaining diverse and durable sources of liquidity. Bond markets provide an especially clear lens through which to assess these dynamics: they reveal how companies are positioning themselves for long-term investment, how creditors perceive risk and how financing strategies adapt as rates, spreads and market sentiment evolve. Understanding these signals enables directors to calibrate capital allocation decisions, anticipate leverage pressures and oversee strategic funding choices with greater precision, making bond market trends and related alternatives an indispensable source of guidance for boards of directors and their decision-making process.

Overview of Bond Markets in 2025

2025 saw record-high bond activity in the United States and internationally, with corporate and government bond issuances reaching $5.95 trillion as of early November 2025, exceeding the previous high in 2024.¹

This data does not capture the continued robust bond activity through the balance of November, although issuances tapered off during December 2025.

The Securities Industry and Financial Markets Association (SIFMA) reported a 12.6% year-over-year increase in the U.S. corporate bond issuances, which reached $2.216 trillion by year-end. The chart below illustrates the activity for U.S. investment grade, high-yield and convertible bond issuances in 2025.²

In 2025, corporate borrowers took advantage of favorable market conditions and a lower interest rate environment to fund AI projects (e.g., data center and related infrastructure development), execute strategic acquisitions and refinance maturing debt.

Financial institutions and technology and communication sectors drove bond issuances over the course of 2025. Bond markets were dominated by highly rated, primarily investment grade debt issuers, which appeared to crowd out other, smaller and less credit-worthy issuers. Smaller and middle-market companies continued to pivot toward private credit markets, generally accepting higher interest rates than would have been available under traditional bank loans or high-yield bonds, driven by their need for certainty, speed, limited public disclosure and tailored financing solutions. Also, 2025 saw considerable growth in private credit not only as a mainstream alternative to traditional high-yield bond offerings,³ but also as an alternative source of financing for investment grade issuers (see example in the table below).

Further, fall of 2025 saw a surge in jumbo-sized offerings in the United States, in particular, by several U.S. tech giants, including Facebook’s parent Meta Platforms Inc. (Meta), Google’s parent Alphabet Inc. (Alphabet) and Oracle Corporation (Oracle), each utilizing the debt markets to fund, among other corporate purposes, substantial investments in AI and related infrastructure. The U.S. jumbo corporate debt offerings included standalone corporate bond issuances, as well as packages of new corporate bonds mixed with loans and private credit, as illustrated in the table below.⁴

All three of the jumbo deals referenced in the table above saw incredible interest on Wall Street and were substantially oversubscribed, which was indicative of the strong demand in 2025 for debt financing associated with the AI buildout. The inclusion of maturities of 40 to 50 years represented a somewhat unconventional departure from the typically lower bond maturity ranges for tech companies, considering the rapidly evolving technology space.⁷ In all three cases, the longest maturities priced at lower-than-expected spreads,⁸ with the overall issuances accomplishing sub-5% weighted average interest rates.⁹

In 2025, the Eurobond market was also a significant funding venue for domestic and international corporate issuers, driven by lower borrowing costs and issuers’ desire to diversify currency exposure. Large U.S. firms dominated the Eurobond market, with the aggregate Eurobond sales by U.S. issuers reaching a record $100 billion by September 2025.¹⁰ Alphabet, Booking Holdings, Colgate-Palmolive, Morgan Stanley and Visa alone raised a combined total exceeding €20 billion in Eurobonds in 2025,¹¹ while Verizon Communications Inc. closed its £1 billion sterling-denominated bond offering, along with a €2.25 billion Eurobond offering in November 2025.¹² The 11 European borrowers, including Orange SA, CaixaBank SA and Raiffeisen Bank International AG, issued an aggregate of €20.45 billion in Eurobonds through early November 2025.¹³ The strong Eurobond issuance trend continued into early 2026, underpinned by reduced recession fears and inflation closing in on European central banks’ target levels, with borrowers pricing a record €61 billion in aggregate Eurobonds in a single day on January 7, 2026, according to Bloomberg.¹⁴

Bond markets were also a preferred venue for U.S. companies to fund strong mergers & acquisitions (M&A) activity, with family-owned candy giant Mars, Incorporated (Mars) leading the way and closing one of the largest acquisition-related financing transactions of the year in March 2025, issuing $26 billion in investment grade bonds in eight tranches, with maturities ranging from two to 40 years, to fund a portion of the cash consideration for its December 2025 acquisition of Pringles’ maker Kellanova.¹⁵

The surge of bond offerings in 2025 was underpinned by one of the strongest credit markets in nearly 20 years, with global risk hovering near the lowest level since 2007.¹⁶ In the third and fourth quarters of 2025, investors’ appetite for bonds continued to exceed the supply, with total investor returns in 2025 exceeding 7%, as of early November 2025, the best in five years,¹⁷ although December 2025 saw an increase in market volatility and tapering in demand, widening corporate spreads.

Bond Market Outlook for 2026 and Alternatives

In 2026, analysts estimate a strong pipeline of high-dollar, investment grade bond offerings in the big tech sector, and tech-related financing is expected to be the dominant theme in broader credit markets. With hundreds of billions of dollars in AI-related capex planned for the next few years, big tech’s free cash flow is expected to be outpaced by spending, potentially leading to more jumbo bond deals in the coming years. Analysts estimate that approximately $3 trillion in data center-related capex is expected by 2030.¹⁸

JP Morgan expects that investment-grade bond markets could see more than $300 billion of AI- or data-center-related debt in 2026 as part of the record of approximately $1.81 trillion in investment-grade bond issuance estimated for the year. Of this amount, approximately $120 billion is expected to be financed by hyperscalers (i.e., large-scale cloud service providers offering extensive computing services intended to facilitate businesses scale), along with another roughly $100 billion tied directly to data center and power buildouts. Over the next five years, JP Morgan forecasted a need for $1.5 trillion of AI/data center funding from the bond market.¹⁹

The overall strength of the bond market in the United States in 2026 will depend on a number of micro- and macro-economic factors, including the trajectory of intermediate- and longer-term interest rates, independence of the U.S. Federal Reserve (the Fed) (with the new chair of Federal Reserve taking the reins in May 2026) and concerns over sustained inflation, any significant increase in U.S. hiring practices or the realization of potentially adverse economic markers (e.g., ongoing market dislocations attributable to tariffs or trading partners unwinding U.S. Department of the Treasury holdings). Although the Fed opted to keep interest rates steady during its January 2026 meeting, market consensus and futures data continue to largely project one or two interest rate cuts in 2026.²⁰ However, if the Fed were to lower the federal funds rate below a level justified by the economic data, it could raise investors’ fears about long-term inflation and the Fed’s credibility in fighting inflation, any of which could result in volatility in the bond markets, an increase in longer-term interest rates and a widening of corporate spreads.

Building on 2025 momentum, private credit is expected to continue to offer a meaningful alternative to bond markets for both private and public companies. With private credit’s significant, often superior, issuance flexibility, companies across a wide range of sizes (from venture-backed growth firms to middle-market and large-cap corporations) and credit ratings (from leveraged credits and stressed or distressed situations to investment grade borrowers) are expected to access private credit markets in 2026. This trend represents an evolution of private credit in recent years, as further evidenced by availability of an increased range of tailored solutions, which traditional bank lenders historically would not provide (e.g., junior lending, which may include an equity component, mezzanine financing, infrastructure debt, real estate lending and asset-backed finance) and the emergence of investment-grade private credit. Consequently, analysts project that private credit assets under management will exceed $2 trillion in 2026²¹ and could approach $4.5 trillion by 2030.²²

Both private and public equity markets are also expected to offer viable financing alternatives in 2026. Following the signs of gradual recovery in 2025, analysts forecast that private equity (PE) markets and initial public offerings (IPOs) in 2026 will experience a robust, constructive rebound, driven by accumulated demand, cooling inflation, declining interest rate environment, stabilizing macro conditions (after tariff volatility) and AI-driven growth. PE firms are expected to focus on exits for mature portfolio companies, while IPO activity, particularly for tech and AI firms, is expected to surge, with 200–230 listings potentially raising $40–$60 billion.²³

Despite these encouraging trends, both public and private bond and equity markets are expected to continue to be volatile due to concerns over economic growth, a potential AI bubble, Federal Reserve governance, elevated inflation, impact of tariff negotiations, the upcoming midterm elections in the United States and a wide range of geopolitical risks, including the U.S. war with Iran escalating into the broader Middle East conflict and its impact on global oil & gas supply, prices and inflation risks, any of which could test investors’ resolve and the overall strength of the U.S. and global debt and equity markets.

Key Takeaways for Boards of Directors

1. Debt Management and Capital Structure

The significant increase in debt issuance by the technology sector is expected to result in wider U.S. investment grade spreads during 2026. On that basis, boards should continue monitoring management plans with respect to impending maturities, focusing on opportunistic refinancings or debt repurchases. Further, an increase in leverage, wider spreads and slower earnings could strain cash flows and place pressure on the ability to comply with financial coverage ratios for companies, including mature issuers. While major tech companies currently have strong balance sheets, a continued shift toward debt financing and higher leverage could prompt credit rating agencies to revise outlooks or consider downgrades if the expected returns on capital expenditure projects, including AI investments, are not credible or do not materialize quickly. For less mature companies, these potential developments could adversely affect capital structures, leading to an increased risk of financial distress or insolvency. In these scenarios, boards will likely face enhanced scrutiny over debt issuances, including whether viable alternatives were considered, use of debt capital proceeds and the projected returns, particularly in relation to sizable AI-related capital expenditures.

During 2026, as a result of comparatively low issuance and servicing costs, public and private debt issuances are expected to continue driving capital markets, including financing AI investments and other major capex projects. That said, equity financing should remain part of an issuer’s corporate finance menu of options, in particular for growth-oriented companies, which may especially benefit from less leverage and a more conservative balance sheet. As part of their oversight, boards should carefully monitor the appropriate levels of debt and equity on their companies’ balance sheets, as well as consider equity and other funding sources as alternatives or complementary funding sources for M&A activity or other corporate priorities.

2. Risk Oversight

Boards should regularly review the internal governance and oversight structures to ensure that comprehensive policies and frameworks are in place for prudent debt management and capital allocation. In that regard, boards should evaluate their companies’ risk appetites, balance sheet composition and desired leverage levels, as well as expectations from the market, investors and credit rating agencies. In approving companies’ annual budgets or business plans, boards must rigorously evaluate the return on investment, especially on the AI-related capex programs, to ensure debt levels remain sustainable. Boards should also continue to closely engage with management, insisting on clearer visibility into how material capex investments (including AI-related investments) are expected to translate into revenue growth, productivity gains and/or cost reductions. In addition, boards are increasingly expected to be involved not only in developing risk mitigation strategies associated with major projects, but also in challenging management on implementation of and anticipated value creation from such projects, in turn necessitating an increased level of particularized experience at the board level with respect to emerging technologies²⁴ and issues (e.g., AI, climate risks, cyber incidents and human capital management).

3. Engagement with Credit Rating Agencies and Major Stakeholders

Boards should continue to proactively engage with credit rating agencies and major stakeholders, in particular in the areas of capital allocation, strategy and risk management to ensure alignment with their expectations, maintain trust, mitigate activist risks and reinforce long-term value drivers.

^{1 Source: Bloomberg. “Global Sales Binge Hits Record $5.95 Trillion This Year.”https://www.bloomberg.com/news/articles/2025-11-05/global-bond-binge-lifts-sales-to-record-5-94-trillion-this-year}

^{2 Source: The Securities Industry and Financial Markets Association (SIFMA). https://www.sifma.org/research/statistics/us-corporate-bonds-statistics}

^{3 Source: Why Everyone’s Talking About Private Credit in 2025. https://www.vaneck.com/us/en/blogs/income-investing/why-everyone-is-talking-about-private-credit-in-2025/}

^{4 Source: Public filings.}

^{5 Meta’s press release dated October 21, 2025, “Meta Announces Joint Venture with Funds Managed by Blue Owl Capital to Develop Hyperion Data Center.” https://investor.atmeta.com/investor-news/press-release-details/2025/Meta-Announces-Joint-Venture-with-Funds-Managed-by-Blue-Owl-Capital-to-Develop-Hyperion-Data-Center/default.aspx}

^{6 MarketWatch. “Meta, Blue Owl and AI: Here are the details of Wall Street’s biggest private-credit deal ever.” https://www.marketwatch.com/story/meta-blue-owl-and-ai-here-are-the-details-of-wall-streets-biggest-private-capital-deal-ever-bf3ad4f7?gaa_at=eafs&gaa_n=AWEtsqfwglmB6FudtrOvR78qc9ZQxg3rhnKlFIhXZubAjMZWKQ6Y7QDtqLj-YmkkaiQ%3D&gaa_ts=6962a23c&gaa_sig=-KSdMJMCzXTn-sIlpVuTC63yCrHQygLVti6CmhI6G8BpCmyadK2xHPCcGvKHN4ldc2goEKcc_23d1-ZcnmGASQ%3D%3D}

^{7 Why Oracle’s ‘jumbo’ AI-fueled bond deal is so unusual.” https://www.morningstar.com/news/marketwatch/20250925494/why-oracles-jumbo-ai-fueled-bond-deal-is-so-unusual}

^{8 Mega-issuance and the AI arms race: Big Tech’s impact on credit spreads.” https://www.janushenderson.com/en-us/advisor/article/mega-issuance-and-the-ai-arms-race-big-techs-impact-on-credit-spreads/#:~:text=Oracle%2C%20Meta%2C%20and%20Alphabet%20(,AI%20hyperscalers%20(US$%20billion)}

^{9 Mega-issuance and the AI arms race: Big Tech’s impact on credit spreads.” https://www.janushenderson.com/en-us/advisor/article/mega-issuance-and-the-ai-arms-race-big-techs-1-on-credit-spreads/#:~:text=Oracle%2C%20Meta%2C%20and%20Alphabet%20(,AI%20hyperscalers%20(US$%20billion)}

^{10 U.S. companies raise record $100 billion in euro bond sales, driven by Alphabet and Visa.” https://www.ainvest.com/news/companies-raise-record-100-billion-euro-bond-sales-driven-alphabet-visa-2509}

^{11 Source: Yahoo Finance and Public Filings. “Alphabet, Visa Help Drive Record $100 Billion in Euro Bond Sales by U.S. Companies.” https://finance.yahoo.com/news/alphabet-visa-help-drive-record-152044602.html}

^{12 Source: Yahoo Finance, Reuters and public filings. “Analysis-From Alphabet to Visa, US giants drive euro-denominated bond surge.” https://finance.yahoo.com/news/analysis-alphabet-visa-us-giants-100555674.html}

^{13 Source: Public filings.}

^{14 Source: Bloomberg.}

^{15 Source: Reuters. “Mars prices $26 billion 8-part bond, highlights big M&A financing week.” https://www.reuters.com/markets/deals/mars-announces-8-part-bond-headlines-big-ma-financing-week-2025-03-05/}

^{16 Global Bond Sales Binge Hits Record $5.95 Trillion This Year.” https://www.swissinfo.ch/eng/global-bond-sales-binge-hits-record-%245.95-trillion-this-year/90287652}

^{17 Source: Bloomberg. “Europe Bond Sales Top €61 Billion in Record-Breaking Day.” https://www.bloomberg.com/news/articles/2026-01-07/bond-deluge-in-europe-sees-record-tranches-offered-in-single-day}

^{18 Not a bubble: $3 trillion data center investment ‘supercycle’ expected by 2030, despite challenges.” https://www.datacenterdynamics.com/en/news/not-a-bubble-3-trillion-data-center-investment-supercycle-expected-by-2030-despite-challenges-jll/#:~:text=Investment%20&%20Markets%20Channel-,Not%20a%20bubble:%20$3%20trillion%20data%20center%20investment%20%22supercycle%22,of%2014%20percent%20through%202030}

^{19 Watch These 6 Signals for Clues on Where Markets Will Go In 2026.” https://www.morningstar.com/markets/watch-these-6-signals-clues-where-markets-will-go-2026}

^{20 What’s Next for the Fed in 2026?” https://www.morningstar.com/markets/whats-next-fed-2026}

^{21 Will Private Credit Maintain Its Momentum in 2026?” https://www.moodys.com/web/en/us/creditview/blog/private-credit-2026.html#:~:text=Growth%20accelerates%2C%20mix%20evolves:%20AUM,but%20opens%20new%20funding%20opportunities}

^{22 On the Record. Today’s private credit opportunity.” https://www.blackrock.com/corporate/literature/whitepaper/private-credit-opportunity.pdf}

^{23 The IPO Market is poised to resume its long-awaited pickup in 2026.” https://www.renaissancecapital.com/review/IPO_Outlook_2026_Public.pdf#:~:text=Themes%20like%20fintech%2C%20healthtech%2C%20digital%20assets%2C%20and,a%20more%20robust%20comeback%20from%20larger%20issuers}

^{24 AI Risk, Return High Among Corporate Board Priorities.”https://news.bloomberglaw.com/in-house-counsel/ai-risk-investment-return-high-among-corporate-board-priorities}