High-Grade Monthly: Summer sprint continues post-Labor Day as rates soar

High-Grade Monthly: Summer sprint continues post-Labor Day as rates soar

Gayatri Iyer, John Atkins

Fri, September 11, 2026 at 7:07 PM GMT+3 3 min read

• ORCL -1.11%

Blazing high-grade issuance for a holiday-shortened week back from Labor Day — a historically explosive period for pent-up dealmaking after summer lulls — totaled $57 billion Tuesday and Wednesday alone across 30 offerings, raising the possibility of a fourth straight monthly record. The totals in June ($184 billion), July ($137 billion), and August ($151 billion) were the highest ever for those months, per LCD.

Syndicate desks are suggesting September supply of well over $200 billion. That would supplant last September's unprecedented $189 billion output, which included the first major shot fired in the ongoing AI debt barrage, via a blockbuster $18 billion print for Oracle.

A lot has changed for the funding landscape since then, however. Oracle priced 5.95% notes due 2055 as part of that year-ago package, and investors initially chased spreads tighter. Not so now: the notes yielded roughly 7.875% on Sept. 10 on dollar prices south of 79% of par, and investors commanded spreads of T+245 to take on the paper, nearly doubling the T+125 pricing level.

AI debt remains a relative outlier for spreads, however. The latest T+78 spread (to worst) for Morningstar's IG index, while up from T+69 at the lows this year, is just one basis point wider year to year, and firm versus the annual averages in 2025 (T+82) and 2024 (T+87.5).

But at 5.59% on Sept. 9, the corresponding yield to worst is up 82 bps over the same period.

September's hot start is without a blockbuster placement so far. Deals Tuesday and Wednesday averaged $1.9 billion, about $220 million less than a record-setting average this year through August. The biggest deals this week are GlaxoSmithKline's $6.5 billion offering backing its Nuvalent acquisition and a $6 billion print for UBS.

Last month's dockets had a bit more headline heft, but only four ($25 billion for Alphabet, $10 billion for AbbVie, $6.75 billion for HSBC Holdings and $5.5 billion for Martin Marietta Materials) came in above the $5 billion jumbo threshold.

M&A has its day
Those AbbVie and Martin Marietta deals backed M&A, as the sector roused from a sleepy summer stretch. Roughly 20% ($31 billion across 10 offerings) of last month's proceeds were earmarked for M&A funding, the highest since May following a particularly dry stretch over the summer (shares were 1% in June and 5% in July).

That leaves a lot on the table in terms of remaining new-money borrowing needs, for M&A, AI infrastructure, or other expansive spending needs, market participants suggest.

AI supply
Talk of more blockbuster hyperscaler issuance this month is a key prop for heady issuance projections. In August, data center and AI financing cooled from the prior two months, but it was still warm enough to make supply-wary investors sweat. Google parent Alphabet last month completed a $25 billion package (10 tranches), which followed a $20 billion US dollar offering and a £5.5 billion placement in February. Blackstone-backed QTS Central Issuer (a unit of developer QualityTech LP) placed a debut $3.9 billion offering of 6.625% five-year (non-call two) senior secured data center bonds. Proceeds will finance construction of a data center in Atlanta, which is under a 15-year, triple-net lease with an IG hyperscale tenant.

Alphabet long bonds and the QTS issue traded below par this week. The QTS yield moved above 6.90% in the aftermarket.

Sign up for The Credit Pitch

Weekly coverage of US and European loans, bonds, private credit, and more.

Subscribe

Mango Productions/Getty Images

This article originally appeared on PitchBook News