Bond investors are growing more cautious on AI-related debt as Democrats prepare legislation targeting AI systems and data center development. US high-yield spreads reached 348 basis points on Thursday before narrowing to 342 on Friday, while single-B spreads widened 35 basis points to 367.
Investors are reassessing AI-related credit as expected political and regulatory scrutiny weighs on appetite for bonds tied to the technology and data center expansion. US high-yield spreads reached 348 basis points on Thursday, their highest since May 2025, then narrowed to 342 on Friday; investment-grade spreads were 93 basis points on Thursday, up from 91 the prior session.
Single-B spreads widened 35 basis points to 367, their highest since March, leading deterioration in the high-yield market. Galaxy Helios Data Center bonds fell to 89.25 cents on the dollar on November 5, lifting yields to 13% from the 9.875% offered when Galaxy Digital's wholly owned unit sold the B+ rated debt in late July.
Some investors expect slower AI investment and stricter regulation to reduce bond issuance and give credit markets time to digest the transition over the next six to 12 months. Investors said projects already underway and committed capital make a significant change to 2027 spending and issuance unlikely, while uncertainty could affect later years, including 2028 to 2030 and beyond.
