π PIMCO: AI Bond Binge Is Splitting U.S. Dollar and Euro Credit Markets
PIMCO's credit team finds that heavy hyperscaler bond issuance to fund AI capex is creating a widening performance gap between USD and EUR investment-grade credit.
β’ Hyperscalers now account for ~5% of the USD IG index vs just 1.2% of the EUR IG index, after $120B of USD net supply this year alone (vs β¬22B in Europe).
β’ Issuer-matched Amazon and Alphabet bonds show EUR paper outperforming USD paper β a sign of "demand fatigue" in the dollar market.
β’ Spread dispersion in USD IG has hit levels not seen since the April 2025 tariff shock, even as headline spreads sit near multi-year tights.
Bloomberg consensus sees hyperscaler capex topping $1 trillion/year from 2027, meaning this technical divergence is likely to persist.
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