Private Credit Overtakes Syndicated Loans in Funding Lower-Rated Borrowers
According to S&P Global Ratings’ latest Liquidity Outlook for 2026, private credit has surged as a vital funding source, especially for 'B-' and below-rated borrowers. For four consecutive years, private credit lending has exceeded broadly syndicated loan issuance in this rating cohort, reaching nearly $146 billion in 2025 compared to around $85 billion in syndicated lending.
| Year | Private Credit (B- and Below, $B) | Broadly Syndicated Loans (B- and Below, $B) |
|---|---|---|
| 2025 | 146 | 85 |
| 2024 | Data not specified | |
This shift is particularly notable given the significant refinancing needs on the horizon. U.S. maturities for 'B-' and below-rated debt are expected to jump to a record $215 billion by 2028, up from $56.6 billion in 2026. The market now faces mounting pressure to accommodate these obligations, placing private credit even more center stage.
AI Drives Tech Debt Issuance to All-Time Highs
The tech sector has seen unprecedented financing demands as capital expenditures soar on the back of the AI boom. Debt issuance from technology companies rocketed to 16.7% of global nonfinancial corporate bond volumes in 2025, up sharply from 11.6% just a year prior. S&P Global Ratings projects the top five U.S. hyperscalers will spend roughly $600 billion in capital expenditures in 2026—a 38% increase over 2025’s already remarkable 68% growth, propelled by rapid AI infrastructure buildout.
| Year | Tech Sector Debt Issuance (% of Corporate Bonds) | Hyperscaler CapEx ($B) | CapEx Growth Year-Over-Year (%) |
|---|---|---|---|
| 2025 | 16.7 | Data not specified | 68 |
| 2026 | Data projected | 600 | 38 |
This surge in issuance poses new challenges for primary bond markets, which must now absorb an ever-expanding wave of tech and AI-driven capital needs, testing their capacity and liquidity.
Rising Leverage and Nonbank Financial Institutions Raise Liquidity Questions
S&P Global Ratings’ analysts highlight increasing leverage among nonbank financial institutions (NBFIs)—particularly hedge funds reliant on short-term funding and lacking transparency—as a potential source of market fragility. Such dynamics prompt further scrutiny of systemic risk, particularly if refinancing needs spike or if other stressors hit
Fed Policy and Global Rate Trends Provide a Steady Backdrop
The report finds that the U.S. Federal Reserve is likely to pursue cautious rate cuts in 2026, with its strong institutional foundation supporting continued market confidence. Meanwhile, the global impact from rising Japanese yields, while noteworthy, is not expected to produce a sustained disruption in major bond markets. Regulatory developments—particularly around U.S. bank capital and stablecoin rules—are identified as incremental but significant influences on system-wide liquidity.
Explosive Growth in Data Center Securitization
One standout trend is the near-tripling of global data center securitization volumes: Topping $30 billion in 2025, this segment has ballooned from just over $10 billion in 2024. Demand for such assets currently exceeds supply, and S&P Global Ratings anticipates continued sharp growth ahead as digital infrastructure expansion persists.
Takeaway: 2026 Credit Markets Face Diverging Pressures and Opportunities
S&P Global Ratings’ analysis paints a picture of credit markets in flux. Private credit is outpacing traditional loan sources for lower-rated issuers, AI-fueled tech investment is setting new records, and nonbank leverage raises new questions about market stability. As refinancing challenges loom and regulation evolves, market participants may want to closely monitor these shifting themes into 2026 and beyond.
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