Wall Street Week · Oct 9, 2026 · 36m · 20m saved
With Loren Moran, Fixed Income Portfolio Manager at Wellington Management · Scott Schulte, Global Co-Head of Investment Grade Debt Syndicate at Barclays · Subadra Rajappa, Head of US Research at Societe Generale · Kevin Hassett, Director of the National Economic Council · Tricia Scarlata, Head of Education Savings at J.P. Morgan Asset Management · Adam Michel, tax policy scholar at the Cato Institute · Erick Russell, Connecticut State Treasurer · Brad Johnston, CEO of Northback · Corb Lund, country singer and organizer of the Water Not Coal petition · Ian Lange, Professor at the Colorado School of Mines · Heather Exner-Pirot, Senior Fellow and Director of Natural Resources, Energy, and Environment at the Macdonald-Laurier Institute
The five biggest hyperscalers, the largest cloud computing companies, are now about 5% of the US investment-grade bond index, up from 1% to 2% two or three years ago.
Since the financial crisis, the largest single concentration in that market has been the big money-center banks. Loren Moran said the AI borrowers will pass them within a year and a half.
"The AI hyperscaler trade will easily overtake the U.S. money center banks in terms of concentration over the course of the next year and a half." — Loren Moran
Loren Moran, Fixed Income Portfolio Manager at Wellington Management, on Wall Street Week, manages investment-grade bond portfolios, the market the hyperscalers are now borrowing from. Scott Schulte, who co-heads the desk at Barclays that places investment-grade bond deals, and Subadra Rajappa, Head of US Research at Societe Generale, join her. The program then turns to new savings accounts for newborns and to a coal mine in the Canadian Rockies that may reopen.
The episode opened with Jamie Dimon, Jim Farley and Gretchen Whitmer on Michigan LIFT, the supplier program Ford, JPMorgan and the state of Michigan launched in September. That interview was also broadcast on Bloomberg Talks and has its own summary, so it is not repeated here.
The full segment is covered here so you can skip it. 36 minutes of audio, 16 minutes of reading.
Here are the 11 takeaways that matter.
Key Takeaways
The five biggest hyperscalers are about 5% of the investment-grade bond index, against 1% to 2% two or three years ago
Their bonds run as long as 100 years, so the index is becoming more sensitive to interest rates
Buyers are demanding more yield on each new hyperscaler deal, Moran said
Data center bonds carry construction, permitting and electrification risk that investment-grade buyers do not usually take
The market prices Oracle's debt differently from Microsoft's, because Oracle borrows far more against its balance sheet
Rajappa said government bonds, not AI, are starting to crowd out the wider bond market
Trump accounts tax earnings as ordinary income, and Cato's Adam Michel said they could make wealth inequality worse
Connecticut puts $3,200 into a baby bond for each child born on the state's Medicaid program
Half of the families saving for college in 529 plans are holding cash, Scarlata said
Northback says the world will be short of steel-making coal from as early as 2030, and wants to reopen an Alberta mine to supply it
Opponents said selenium in the water and coal dust put far more jobs at risk than the mine creates
1. $300B of Hyperscaler Debt
The program said shares of the six hyperscalers, the largest cloud computing companies, are up an average of 15% this year, and that bond investors are now being asked to fund them.
Moran expects about $300 billion of investment-grade borrowing from hyperscalers in 2026
Hyperscaler borrowing had only begun in 2025, she said. By some estimates the program cited, tech companies were 5% of investment-grade corporate bond issuance in 2024 and are close to 20% now.
Moran expects about $2.25 trillion of total US investment-grade issuance this year, up around 35% from last year.
"And importantly, when we think about the actual growth in our debt markets is largely coming from the hyperscalers at this point." — Loren Moran
Buyers are now demanding more yield from each new deal, she said
"These were new issuers. They were AA rated balance sheets." — Loren Moran
"Buyers are demanding more compensation to lend to these issuers as they're a growing footprint in our markets." — Loren Moran
Governments and M&A deals also need capital, she said, and the total demand is causing what she called "indigestion."
