The AI Bond Market: How Debt Instruments Became the Main Driver of Neural Network Financing
The artificial intelligence industry has found an unexpected but highly effective way to attract capital. This is not about venture rounds or IPOs, but about classic debt instruments—corporate bonds. According to my calculations, by 2026, the volume of the AI debt market could reach $570 billion, and this trend is already radically changing the financing landscape for technology giants.
At the center of this process are giants like Nvidia, as well as the Chinese startup Moonshot AI with its new neural network Kimi K3. However, the main players here are pension funds and insurance companies, which operate without much fanfare but on a massive scale.
How Morgan Stanley Turns Debt into Gold
Capital is moving at record speeds. By the end of May, the volume of issued "AI debt" reached $236 billion—four times more than in the same period last year. Morgan Stanley, anticipating this growth, conducted bond issuance deals for AI companies worth $65 billion in just the end of 2025. The result: $2.3 billion in fees over six months, significantly higher than the $1.4 billion figure a year earlier. Thanks to this surge, Morgan Stanley surpassed Goldman Sachs and now trails only JPMorgan Chase.
Financiers structure the credit obligations of IT giants, using contracts for computing power as collateral. The finished bonds are eagerly bought by conservative investors seeking reliable yet profitable assets.
Google, Meta, and "Hidden" Debts
A telling example is the company TeraWulf. The former bitcoin miner repurposed its capacities for the needs of neural networks. A debt issuance of $3.2 billion attracted bids worth $10 billion, with a yield of 7.75% per annum. The high demand for the low-rated miner's bonds is explained by the direct involvement of Google. The tech giant guaranteed a lease of $3.2 billion, receiving in return an option for 14% of TeraWulf's shares. Cipher Mining also closed a similar deal.
Meta chose an even larger-scale path. With the assistance of Morgan Stanley, the company raised $27 billion for the Hyperion complex in Louisiana. This deal set a record for the private credit market. Partner Blue Owl's share is 80%, so the obligations are not reflected on Meta's balance sheet, creating an effect of "hidden" debt.
The Market Demands a Risk Premium
However, euphoria is beginning to give way to caution. In February, the over-lending of IT giants exceeded supply by five times, but by July this figure had fallen below the two-fold level. At the end of 2025, the cost of insurance against Oracle's default rose to its highest since 2009. Market participants' concerns are growing alongside talks of an overheated industry.
Despite this, investment needs remain enormous. Required investments in data centers until 2028 are estimated at $2.9 trillion, while IT companies' own funds cover only 50% of the needs. The remaining portion will have to be raised through debt capital.
My analysis: The development of railways and telecommunications in past eras relied on bonds. Now, the debt market is financing the advancement of neural networks. Every microchip operates on credit funds. The cost of borrowing will determine the ultimate speed of technology adoption, and if rates continue to rise, we may see the first wave of restructurings in this sector as early as 2027.