AI infrastructure financing could drive $500bn wave of chip debt, says Citadel Securities

The rapid expansion of artificial intelligence infrastructure is set to generate more than $500bn of additional debt issuance by 2028, creating a significant new opportunity for private credit providers and institutional investors, according to a report by Bloomberg citing Citadel Securities.

The trading firm forecasts that chip manufacturers and AI infrastructure companies will raise more than half a trillion dollars across both public and private debt markets to finance the semiconductors powering next-generation AI data centres.

Jeff Eason, head investment-grade desk analyst at Citadel Securities, said much of the borrowing is expected to take the form of shorter-dated debt with maturities of three to five years, reflecting the relatively short operating life of advanced AI chips. A proportion of the financing is also expected to come through Rule 144A private placements, creating additional opportunities for private market investors.

According to Citadel Securities, the projected issuance would represent more than 5% of the Bloomberg US investment-grade bond index by 2028 and could ultimately prove larger than current estimates.

The prediction comes after global debt markets have already absorbed around $570bn of AI-related financing, largely raised by hyperscale technology companies including Amazon, Microsoft and Google to support unprecedented investment in data centre infrastructure.

However, Citadel believes financing requirements are shifting beyond the hyperscalers towards the semiconductor ecosystem. While US public markets have absorbed around $60 billion of shorter-dated issuance from large technology companies since last year, Eason estimates that chip manufacturers alone could issue more than $250 billion of debt in 2028.

The growing financing requirement is also expected to benefit private credit managers, which have become increasingly active in funding AI infrastructure and related technology investments.

One of the highest-profile transactions this year saw Anthropic secure a financing package of approximately $35 billion to acquire Google’s custom TPU chips, in what is widely regarded as one of the largest private credit transactions completed to date. The transaction demonstrated how bespoke private financing structures are becoming an increasingly important source of capital for AI developers seeking to scale rapidly.

Citadel believes the influx of AI-related debt could reshape institutional credit portfolios, with investors likely to reduce exposure to traditional technology, media and telecommunications issuers to accommodate the emergence of a new AI infrastructure financing segment.