2026 Midyear Credit Outlook: Adoption, Financing, and Investing in the Age of AI

AI-driven financing is reshaping credit markets by narrowing the margin for error, increasing dispersion and making bottom-up security selection more important.

• The first half of 2026 combined resilient markets and economic fundamentals with major shocks: the Iran conflict kept the Strait of Hormuz effectively closed for about 145 days, while US GDP grew at a 2.1% annualized rate, unemployment stayed at 4.2% and consumer spending rose 0.5%.
• Credit fundamentals remain supportive: first-quarter high-yield EBITDA was about 7% above consensus, positive guidance revisions outnumbered negative revisions by more than two to one, and trailing default rates were 2.67% for high-yield bonds and 2.29% for leveraged loans.
• AI-related supply is becoming a technical headwind: net US investment-grade issuance is on pace for $1 trillion in 2026, while Amazon, Alphabet, Microsoft, Meta, Oracle and SpaceX have issued more than $200 billion; over $30 billion of data-center debt was issued in high yield during the first six months.
• The financing wave is extending across markets, including CoreWeave's $3.1 billion GPU-backed facility, SpaceX's roughly $75 billion IPO and Alphabet's approximately $85 billion equity raise, while OpenAI and Anthropic attract private capital at valuations approaching $1 trillion.
• AI exposure is creating hidden correlations across cloud computing, power, real estate, leveraged finance, equities and investment-grade credit, while software and other workflow-driven sectors face disruption and more than $100 billion of software and services loans mature between 2027 and 2029.

Takeaway: With spreads near historic tights and AI issuance beginning to overwhelm market capacity, Apollo expects less benefit from broad spread compression and more opportunity in idiosyncratic relative value, private investment-grade structures and disciplined credit selection, while acknowledging that strong fundamentals should limit the risk of a broad selloff.