From Betashares
- AI hyperscalers are estimated to spend around US$660 billion on capital expenditure in 2026, fuelling a surge in global bond issuance to fund AI infrastructure, with diversifying funding bases away from USD markets becoming an increasing priority. This trend is already emerging, with Alphabet last week issuing debt in Sterling and Swiss francs.
- As global capital looks to diversify away from concentrated US dollar exposure, Australia is emerging as the “cleanest dirty shirt” in global fixed income, with a stronger fiscal position, AAA rating and greater policy stability than many major economies.
- We expect this trend to become evident in the second half of the year, though activity could emerge earlier. Alphabet’s recent issuance in Sterling and Swiss francs highlights how large technology issuers are already diversifying funding sources beyond USD markets.
- Currently, technology represents just 0.15% of the AusBond Credit Index, leaving Australia structurally underweight the sector. Greater issuance from highly rated global AAA and AA corporates into AUD markets would expand the domestic opportunity set and allow investors to access high-quality global credit without going offshore.
Betashares Head of Fixed Income, Chamath De Silva, said: “One of the most important developments we expect this year is global investors paying much closer attention to the Australian bond market. The credit market has matured materially, the investor and issuer base is broadening, and Australia’s fiscal position stands out at a time when concerns around debt sustainability are rising globally.
“Australia continues to look like the cleanest dirty shirt in global fixed income. Compared to the US, UK and Japan, our public balance sheet remains in far better shape, we retain a AAA credit rating, and there are fewer concerns around fiscal policy or central bank independence.
“These factors are supportive for global demand, especially against a backdrop of investors looking to diversify away from US dollar assets more generally, and US Treasuries more specifically. The combination of a hiking cycle that’s already priced in, a compelling term premium, and structural advantages should make Australian government bonds an attractive destination for global capital seeking high-quality sovereign exposure. We’re also seeing more global demand for Australian credit, owing to our strong financial sector, increased weight in global indices, and relatively attractive credit spreads.
“Separately, we’re seeing a surge in corporate bond issuance globally, particularly from US technology and data-centre operators funding AI infrastructure. This is lifting the weight of the technology and communications sectors in global investment-grade benchmarks, but Australia remains structurally underrepresented in those sectors.
“The Australian corporate bond market has been historically starved of technology-related issuance, currently holding just a single Apple bond which will mature this year. As global investors look to diversify funding sources and reduce concentration in US-dollar credit, we foresee more issuance of AUD denominated global technology and communications bonds, which we also believe will be strongly supported by investors.
“In 2026, with unprecedented levels of US capex, Australian corporate bonds are likely to benefit, owing to strong domestic credit fundamentals, an underweight to the technology sector, and attractive outright yields. That combination positions Australia as a clear beneficiary of global capital flows looking for alternatives to US dollar assets. We expect to see this trend to become evident in the second half of this year, though given the recent announcements from US Hyperscalers, we could see technology represent a much greater percentage of the AusBond Credit Index soon.”
