S&P forecasts global bond issuance growth of 2.7% in 2027, slowest in five years

After a heavy 2026, a sharp deceleration in supply growth would relieve one pressure point on bond markets, potentially helping corporate spreads remain tight provided demand stays strong. The primary swing factor for supply is AI-related borrowing. With capital expenditure anticipated to surpass $1.3 trillion, bond issuance by hyperscalers will keep testing demand for tech credit. The outlook is tied to oil prices through references to the Middle East war. A fresh increase in crude prices could fuel inflation, delay expectations of rate cuts, and amplify the headwinds outlined by S&P. An increasing weight of Chinese bonds in global benchmarks would also progressively make index-tracking funds more sensitive to Chinese interest rate shifts.

---

Earlier:

• Previously: Fitch predicts Fed rate increase to 4.25% in December, with US credit outlook said to remain favourable

---

Following a strong 2026, S&P anticipates that the increase in global bond issuance will decelerate sharply in 2027, although AI borrowing and refinancing requirements ensure continued debt supply.

Summary:

• S&P Global Ratings projects that global bond issuance will rise by 2.7% in 2027, compared with an estimated 12.2% in 2026, marking the weakest growth in half a decade.
• Total global issuance is projected to be approximately $11.7 trillion in 2026.
• Elevated borrowing costs and uncertainty stemming from the Middle East war may reduce borrowers' willingness.
• Hyperscaler bond sales are approaching $300 billion in 2026, and S&P expects a more moderate increase in 2027, given AI capital expenditure projected to exceed $1.3 trillion.
• China is anticipated to continue contributing to issuance growth, as decreasing government bond yields reduce financing expenses.
• Appetite for government and corporate debt stays strong, and corporate bond spreads have tightened.

Global bond issuance growth is due to decelerate markedly in 2027, with S&P Global Ratings projecting a 2.7% rise, compared with an estimated 12.2% in 2026 and the slowest in five years, based on its outlook reported Tuesday.

The deceleration starts from a high base. S&P projects total global issuance at about $11.7 trillion in 2026, meaning that even slight growth in 2027 would still result in substantial volumes. The projection indicates a loss of momentum, not a pullback by borrowers.

S&P cites two factors that could restrain issuers. High interest rates increase the expense of new loans and refinancing, while uncertainty from the Middle East war may make some borrowers cautious about market timing. However, many issuers cannot afford to delay, given maturing corporate debt that requires refinancing and ongoing government borrowing for defense spending and aging population costs.

Artificial intelligence continues to be a major source of bond supply. Hyperscalers—large cloud and data centre operators funding AI infrastructure—have issued bonds nearing $300 billion in 2026, and S&P expects further growth in 2027, albeit at a reduced rate. AI-related capex is projected to surpass $1.3 trillion in 2027, implying that the biggest tech firms will remain frequent debt market visitors to finance it.

China is predicted to remain a growth source. Declining yields on Chinese government bonds have cut borrowing costs for domestic issuers, and ongoing issuance expansion could slowly raise China's share in key bond indices. This would heighten index-tracking funds' sensitivity to Chinese rate changes and currency hedging considerations.

Demand has matched supply to date. S&P stated that interest in sovereign and corporate debt stays strong, and corporate bond spreads—the additional yield sought by investors versus government bonds—have tightened, suggesting that the market has digested the large 2026 issuance without demanding extra compensation.

Thus, the 2027 forecast depends more on borrowing costs than on investor appetite. If interest rates remain elevated and geopolitical risks linger, issuance growth may remain weak beyond 2027.