AI Debt Binge Is Set to Test Credit’s 1990s-Like Euphoria (1)

Credit investors who shrugged off an historic bout of global volatility this week are about to face a major test after yield premiums on US investment-grade corporate debt shrunk to their lowest in about three decades.

Spreads, or the extra yield above Treasuries that investors demand for owning the high-quality company debt, tightened to just 71 basis points, according to Bloomberg index data. That marks the lowest for the measure since 1998.

With major tech companies needing trillions of dollars to fund their artificial-intelligence buildout plans, those levels may be fleeting, according to Hans Mikkelsen, a credit strategist at ...