# Morgan Stanley Sees Better Risk-Reward in High-Grade Hyperscaler Bonds By Enna Lee Canonical URL: https://www.tokenpost.com/news/investing/55134 Published: 2026-11-12T08:40:19.000Z Updated: 2026-11-12T08:40:19.000Z Section: Investing > The bank expects financing terms to split further by credit quality and projects AI-related capital spending will reach $1.66 trillion in 2027. Morgan Stanley sees improving risk-reward in investment-grade hyperscaler bonds as AI financing worries persist, while expecting borrowing terms to diverge further between top-rated technology companies and weaker borrowers. Morgan Stanley strategist Fernanda Lima set out that view in a Tuesday note: “We see an improving risk-reward for HQ hyperscalers and expect more spread volatility for data center bonds and neoclouds given execution and funding risk.” Hyperscalers have investment-grade ratings and strong balance sheets, while junk-rated companies tend to carry more leverage. That credit gap underpins the bank’s expectation that financing conditions will separate further by issuer quality. AI-related bond supply has weighed on credit markets this year. Yields rose for many issuers, while five-year credit-default swap spreads widened. These swaps serve as insurance against default, and bond prices generally move in the opposite direction from yields. The strongest borrowers have continued to tap debt markets. Microsoft, Meta Platforms and Oracle have issued U.S. bonds since Sept. 30; Alphabet issued bonds in Europe, and some of Meta’s bonds also went to Europe. Issuance across the two markets totaled $67 billion over that period. Morgan Stanley says strong balance sheets and earnings cushions give hyperscalers room to absorb higher borrowing costs, while prospective returns support continued investment. The companies have also shown a willingness to pay more to issue bonds. After the recent deals were priced, spreads tightened on most issuers; Oracle’s widened. Tighter spreads generally indicate higher bond prices. Credit concerns have been sharper for lower-rated borrowers. CoreWeave’s bond yield topped 16% earlier this month, adding to [earlier market concerns over AI debt](). The neocloud company reported a third-quarter revenue beat and raised its full-year guidance after the market closed Tuesday. Its shares rose more than 25% Wednesday. Morgan Stanley expects little AI-company bond issuance activity, if any, for the rest of 2026. The bank projects AI-related capital expenditures of $1.66 trillion in 2027, up 75% from 2026, and $1.77 trillion in 2028. Lima expects local data center restrictions to delay some construction. She sees investment-grade hyperscalers as better positioned to navigate uncertainty, secure power and start projects. Lima said she would not be surprised by more financing transactions, including equity issuances, as companies seek to fund the gap between investment and monetization. ## Links in this article - [earlier market concerns over AI debt](https://www.tokenpost.com/news/investing/33922)