Global Markets Daily AI Funding Needs and Strong Demand Fuel Record Convertible Supply

Economics Research 9 September 2026 | 3:56AM MDT

Global Markets Daily: AI Funding Needs and Strong Demand Fuel Record Convertible Supply

n Year-to-date USD convertible bond volume has reached $135 billion, with Spencer Rogers, CFA | AI-related borrowers driving 44% of total issuance, on our estimates. Goldman Sachs & Co. LLC

n Hyperscaler issuers, including Alphabet ($19 billion across two tranches) and Oracle ($5 billion), have tapped the convertible market this year to optimize debt capacity and rating agency credit metrics alongside large-scale capex programs. n Given elevated implied volatility that increases the value of the conversion option, strong small/mid cap equity performance, and tight credit spreads on traditional straight bonds, demand for convertible bonds has swelled. n From an issuer’s perspective, the convertible market remains attractive to reduce borrowing costs and optimize leverage profiles. Conversion premiums have been widening for newly issued convertible bonds and the share of new supply issued with a zero coupon is elevated. n The convertible bond market has established itself as an important funding source for AI infrastructure. In an environment characterized by tight credit spreads, ongoing dispersion across technology equities, and substantial capex funding needs, we think convertible bonds remain uniquely positioned to deliver asymmetric risk/reward profiles and attractive upside convexity for total return credit portfolios.

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Goldman Sachs Global Markets Daily

AI Funding Needs and Strong Demand Fuel Record Convertible Supply

Convertible bonds have long been an important vehicle for funding early-stage, growth-oriented companies, giving investors exposure to equity returns on the upside while sitting higher in the capital structure and having the benefit of bond-like risk if the growth doesn’t materialize. Given this dynamic, the convertible bond market has long been dominated by biotech, pharmaceutical and technology names. It should come as no surprise then that over the last couple of years it has increasingly become a funding vehicle of choice for AI-focused companies; particularly for smaller, speculative-grade names that might be new to the space or making a pivot to AI from another business model.

The proliferation of AI converts offerings has led to a surge in primary market issuance: year-to-date USD supply of $135 billion has already set a full-year record with still four months left in the year (Exhibit 1). Based on our estimates, 44% of this supply has come from AI-related names (Exhibit 2). While the vast majority of these offerings have come from the smaller issuers with high yield (HY) ratings, a key development in 2026 has been the selective entry of investment grade (IG) mega-cap technology issuers. For example, Google issued over $19 billion across two tranches in June and Oracle issued a $5 billion dollar tranche in February.

Exhibit 1: 2026 convertible supply has already surpassed Exhibit 2: AI-related names account for nearly half of the any previous full-year total year-to-date convertible bond supply Annual supply of USD convertible bonds broken out by Annual USD convertible bond supply broken out between AI and year-to-date vs. rest-of-year non-AI related issuers

$bn $bn Year-to-Date Rest-of-Year Non-AI AI 160 160

Source: Dealogic, Goldman Sachs Global Investment Research Source: Dealogic, Goldman Sachs Global Investment Research

In our view, this type of hyperscaler equity-linked issuance achieves two primary structural objectives: 1) diversification of financing sources given potential market capacity constraints and 2) balance sheet optimization. In one instance, the convertible offering was done in conjunction with a larger equity raise, which to us suggests a strategic intent to diversify financing across asset classes and potential acknowledgment of issuer concentration and market saturation limitations in the USD IG corporate credit market. We also see an element of balance sheet…