UBS has revised its 2026 forecasts for U.S. tech investment grade bond sales upwards, citing increased spending by major tech firms. The financial institution simultaneously cut its forecast for leveraged loans, anticipating potential disruption from artificial intelligence (AI). Several megacap tech companies, including Meta, Amazon, and Alphabet, have recently announced substantial increases to their capital expenditure plans during the latest earnings season. Alphabet, for example, is a technology conglomerate, operating through several subsidiaries, that focuses on search, cloud computing, and artificial intelligence. Meta Platforms, Inc. is a global technology company that develops and provides social media and virtual reality products and services.
The revisions see UBS’s global credit team raising its U.S. investment grade tech issuance forecast to $360 billion from $300 billion. This adjustment increases UBS’s overall forecast for U.S. investment grade debt issuance from $1.725 trillion to $1.8 trillion for the year, with the tech sector now accounting for a fifth of the total. Conversely, the U.S. leveraged loans forecast has been reduced to $360 billion from $450 billion. UBS anticipates that aggregate capital expenditure spending by hyperscalers could approach $770 billion for 2026, approximately 23% higher than previous expectations, assuming recently announced increases are realised.
According to UBS, hyperscaler public debt issuance could rise by an additional $40 billion to $50 billion, potentially reaching as much as $240 billion. The analysts also foresee increased non-U.S. dollar supply in the tech sector compared to previous years. This shift is exemplified by Alphabet’s recent forays into the sterling and Swiss franc markets as part of a $31.51 billion global bond raise. “Alphabet’s recent CHF (Swiss franc) and GBP (sterling) bond deals imply that U.S. tech companies will continue to look globally to fund capex,” UBS analysts noted.
The reduction in the leveraged loan issuance forecast reflects concerns over the potential for AI-driven disruption in leveraged loans and private credit markets. UBS suggests that the disruption risk created by AI is currently underpriced in these areas. Potentially wider spreads in the leveraged loan space, driven by higher disruption risk, could negatively impact refinancing activity, according to UBS’s analysis.
