By Lucy Raitano
LONDON, Feb 18 (Reuters) – UBS lifted its 2026 forecasts for U.S. tech investment grade bond sales on Wednesday, pointing to rising spending by big tech firms, while cutting its forecast for leveraged loans on expectations that AI-related disruption could curb supply.
Several megacap tech companies including Meta, Amazon and Alphabet have announced big increases to their capital expenditure plans during the latest earnings season.
After years of outsized gains, big tech stocks, meanwhile, have fallen in 2026, as investors question whether heavy AI spending will generate sufficient returns to warrant lofty valuations.
UBS’s global credit team in a note raised its U.S. investment grade tech issuance forecast to $360 billion from $300 billion.
That takes UBS’s overall forecast for U.S. investment grade debt issuance from $1.725 trillion to $1.8 trillion this year, with tech accounting for a fifth of that.
It also cut its U.S. leveraged loans forecast to $360 billion from $450 billion.
HYPERSCALER CAPEX TO OUTPACE BANK’S PREVIOUS FORECASTS
If recently announced capex increases are realised, UBS sees aggregate capex spending by so-called hyperscalers approaching $770 billion for 2026 – around 23% higher than the bank’s previous expectations.
Hyperscaler public debt issuance, UBS said, could increase by an additional $40 billion to $50 billion to as much as $240 billion.
UBS also expects more non-U.S. dollar supply in the tech sector versus previous years. Last week, Alphabet tapped 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 said in the note.
Late 2025 saw big tech firms shift to tapping debt markets to fund AI data centres, leading to a surge in issuance across a range of debt markets.
In recent weeks, concerns over how powerful AI models might disrupt traditional business models have also proliferated through markets.
UBS is lowering its leveraged loan issuance forecast on an expectation that disruption created by AI is most underpriced in leveraged loans (LL) and private credit markets. Potentially wider spreads in the LL space due to higher disruption risk could hit refinancing activity, says UBS.
(Reporting by Lucy Raitano; Editing by Dhara Ranasinghe and Joe Bavier)
