According to Zhitong Finance APP, as artificial intelligence (AI) infrastructure construction continues to drive growth in financing demand, major Wall Street banks are preparing to extend their months-long bond issuance spree. Barclays estimates that the six largest U.S. banks will raise approximately $41 billion through the bond market in the fourth quarter, which is 30% higher than the average issuance scale for the fourth quarter since 2015, reflecting that the AI investment boom is not only driving technology companies to raise large amounts of funds but also boosting banks' own funding needs.
Barclays analysts Peter Troisi and Ishika Goyal noted in an October 1 report that the six largest U.S. banks issued $50 billion in senior bonds in the third quarter, more than double the same period last year. As AI-related financing activities remain active, banks are expected to continue actively entering the bond market in the fourth quarter. The analysts said that banks are increasing their bond issuance scale partly to meet the massive financing needs required for AI infrastructure construction, and partly to support trading and capital market activities driven by the AI investment boom.
Currently, technology giants including SpaceX (SPCX.US) and Oracle (ORCL.US) are investing hundreds of billions of dollars to expand AI infrastructure. As large technology companies continue to increase capital expenditures, banks not only need to provide financing for related projects but also support the resulting loans, securities trading, and other capital market businesses, further driving up their own funding needs.
Barclays pointed out that despite the significant increase in bank bond supply, the market has so far absorbed new issuance relatively well, and the yield premium of bank bonds relative to benchmark rates has remained stable. This means that banks currently still have relatively favorable financing conditions, which also provides motivation for them to continue raising funds and seize AI-related business opportunities.
Barclays expects that all six major U.S. banks are likely to return to the bond market in the fourth quarter. Analysts said that sufficient financing capacity is crucial for banks to seize growth opportunities brought by AI-related businesses. However, delays in some technology companies' initial public offering (IPO) plans could also limit banks' bond issuance demand to some extent.
Looking at full-year data, the financing scale of major Wall Street banks has already significantly exceeded the same period last year. Barclays data shows that the six largest U.S. banks have raised a cumulative $192 billion in global bond markets so far this year, a year-on-year increase of about 40%, and full-year financing is expected to reach $233 billion. For the entire U.S. banking industry, Barclays currently expects total senior bond issuance in 2026 to reach $294 billion, about 25% higher than its initial forecast and significantly above the $240 billion in 2025.
Banks typically choose to enter the bond market to raise funds after announcing quarterly results. As the earnings season for large U.S. banks is about to begin, a new wave of bond issuance may arrive soon. According to earnings schedules, Wells Fargo (WFC.US), JPMorgan Chase (JPM.US), Goldman Sachs (GS.US), and Citigroup (C.US) will report results on October 13, while Morgan Stanley (MS.US) and Bank of America (BAC.US) will release earnings on October 14.
Bloomberg Intelligence analyst Arnold Kakuda believes that among the six major banks, Goldman Sachs and Morgan Stanley, which have led in bond issuance so far this year, may become the most active financing institutions after next week's earnings announcements. However, not all institutions believe that the six major banks will concentrate their bond issuance after earnings.
JPMorgan strategists including Kabir Caprihan estimated in a Tuesday report that U.S. banks' October bond issuance will be about $24 billion. JPMorgan noted that Wells Fargo and Citigroup already issued a combined $18 billion in bonds last month outside their regular post-earnings financing windows, so it expects these two banks will not raise large amounts again after this round of earnings announcements. The bank also believes that Bank of America may temporarily refrain from entering the bond market, so new October supply is expected to mainly come from Morgan Stanley and Goldman Sachs.
At the same time, large-scale bank bond issuance still faces certain constraints. Recently, U.S. benchmark borrowing costs have risen notably, which may reduce banks' willingness to further increase debt. Although large banks are usually good at timing financing, if interest rates remain elevated, their new financing costs will also increase accordingly.
More notably, as the scale of AI infrastructure investment continues to expand, market concerns about the debt burden of large technology companies have also begun to heat up. Some investors worry that technology giants' continued reliance on borrowing to support high capital expenditures may increase future debt repayment pressure and pose risks to related credit markets.