1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 144
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
AI Tech bond issuance
$120B
$80B
$40B
$0B
2020
2021
2022
2023
2024
2025
AI group includes Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Oracle Corp. Bond issuance in US$.
Sources: Bloomberg Finance L.P., Scotia Wealth Management
U.S. investment grade tech sector spreads trade inside the broader index level but are now wider
than their tightest levels seen in mid-September 2025 reflecting the heavy issuance in the sector
over the last quarter of 2025, with investors likely anticipating further supply ahead given the
numerous commitments announced. Some of the key risks over the medium term include debtfinanced, highly levered mergers and acquisitions that could weaken acquirer fundamentals and
trigger rating downgrades. Within the IG tech sector, dispersion by rating persists, though large
issuers still offer limited spread carry, reflecting their pristine balance sheets and credit profiles.
Emerging market debt: 2026 outlook remains constructive
Emerging market (EM) debt has consolidated its role as a relevant component of diversified global
fixed income portfolios as the global economy continues to adjust to evolving trade and
macroeconomic dynamics. A supportive global monetary environment, improved risk sentiment,
and attractive yield cushions underpin the investment case, reinforced by more stable macro
frameworks and favourable relative growth prospects.
EM fixed income delivered strong results in 2025, with local currency (LC) debt returning 16.6%
and hard currency (HC) debt 13.2%, significantly outperforming major developed market
benchmarks.
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