How Higher Rates and AI Issuance Are Affecting Credit Markets

Credit spreads remain near historic tights despite AI debt surge and rate volatility, but sector dispersion is the real risk to watch.

• Spreads remain tight: Investment grade credit sits near the 10th percentile and leveraged finance near the 25th percentile on a 20-year lookback, despite rate volatility.
• Three stress points under the hood: Finston cites AI-related debt issuance/supply, disruption from new technologies, and higher-for-longer rates hitting certain sectors disproportionately.

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