AI Infrastructure Firms Offer Junk-Bond Yields to Attract Investors

Investment-grade companies financing artificial intelligence infrastructure are increasingly attracting high-yield, or junk bond, investors by offering unusually high yields to cover massive upfront costs. Companies have borrowed over $410 billion this year to build out AI capacity, leading to a trend where blue-chip securities trade at rates typically reserved for riskier debt.

QTS Realty Trust Inc. recently sold $3.9 billion in high-grade bonds with a 7.23% yield for a facility in Georgia tied to Microsoft Corp. Similarly, BlackRock Inc. offered a 7.53% yield for a data center project in Texas. In secondary markets, high-grade notes from firms such as Oracle Corp. and SpaceX are trading at junk-like yields.

Other major financing efforts include Broadcom Inc., which is reportedly negotiating over $60 billion in debt for an AI chip financing deal intended to benefit Anthropic PBC. While these high yields broaden the buyer base for AI infrastructure, some experts warn that rising borrowing costs could eventually limit the debt supply for firms that lack significant financial cushions.