AI debt lures junk bond investors with high yields

Investment-grade companies are increasingly selling AI-related debt to junk bond investors to secure financing, with yields exceeding typical speculative-grade levels. QTS Realty Trust sold $3.9 billion in bonds for a Microsoft-linked Georgia facility at about 7.23 percent. BlackRock is paying 7.53 percent on blue-chip securities for a Texas data center project. Companies have borrowed over $410 billion for AI infrastructure this year, with underwriters marketing deals to both high-grade and high-yield investors amid intense capital competition. Junk investors buying high-grade debt is not unprecedented, but tech firms now borrow at record levels versus past equity funding. Hyperscalers could spend nearly $800 billion on AI this year, with most financed through debt markets.