IN FOCUS6-8 min read
Schroders Credit Lens December 2025: your go-to guide to global credit markets
Big tech has borrowed more in the current quarter than in any full year in history, other than 2017
Profily autorov
Links to all three versions of the Credit Lens are provided below and at the bottom of the page.
- Big tech has borrowed more in the current quarter than in any full year in history, other than 2017. This has contributed to USD IG issuance running well above average (slides 4-5)
- Expect this re-leveraging cycle to continue but:
- their starting credit fundamentals are strong
- these issuers are a relatively small part of the index at present
- past episodes highlight that building of fundamental fragility can take time (slides 6-7)
- “Reverse Yankee” issuance, euro-issuance from US borrowers, has also hit a record. This is in part due to Alphabet issuing a large euro bond. More is expected from AI-related borrowers in 2026. Overall euro-issuance is running even hotter than US (slides 8-9)
- Although supply has been high, demand has been solid – credit spreads are expensive across the board (slides 10, 29). Appetite will continue to be tested in 2026, as issuance is forecast to keep rising due to AI.
- Fundamentals are reasonable and the macro backdrop is supportive for corporate bonds but valuations are very expensive. Investment grade (IG) spreads only need to rise ~10-15 basis points over the next 12 months to wipe out the current spread and leave them underperforming government bonds. (slide 11)
- EUR and GBP bonds continue to offer a yield pickup over USD bonds on a fx-hedged basis. This should support demand for EUR bonds from international investors(slide 12)
Charts of the month
Profily autorov
Témy