BlackRock's Rick Rieder Favors AI Infrastructure Bonds Over Treasurys

BlackRock Chief Investment Officer of Global Fixed Income Rick Rieder favors high-grade bonds financing artificial intelligence infrastructure over long-term U.S. Treasurys as companies expand borrowing for data centers and computing equipment.

Rieder described the scale of borrowing for AI infrastructure as unprecedented. He pointed to graphics processing units and data centers as examples of projects drawing financing from the bond market.

He favors secured bonds from high-quality companies and assets that generate cash flow. He also prefers shorter maturities, which reduce exposure to interest-rate changes compared with longer-term Treasurys.

The 10-year U.S. Treasury par yield was 5.00% on Oct. 26. Rieder’s preference for corporate credit follows his fourth-quarter case for investment-grade bonds, which also focused on companies financing AI infrastructure.

In that earlier view, he described a hypothetical diversified portfolio yielding more than 7%, with duration below three years and an average A-minus credit rating. That figure described a portfolio, not the yield on an individual A-rated bond. Rieder also considers semiconductor and computing stocks reasonably valued.