Wall Street’s biggest banks are set to extend a months-long borrowing binge and issue more bonds than usual in the fourth quarter, raising funds to meet the insatiable financing needs fueling the artificial intelligence boom.
Analysts from Barclays Plc estimate the six largest US banks will tap the debt market for about $41 billion in the current quarter, an amount that would be 30% above the fourth-quarter average going back to 2015. In the third quarter, senior debt issuance reached $50 billion, more than double prior-year levels, according to Barclays.
Banks have ramped up borrowing to finance not only the AI buildout, and the hundreds of billions being spent by hyperscalers and tech giants from SpaceX to Oracle Corp., but also to facilitate the increased trading and market activity that has cropped up in tandem with the growing industry, Barclays analysts Peter Troisi and Ishika Goyal wrote in an Oct. 1 report. The wave of supply has been “relatively well-digested” so far, they said, and with yield premiums on bank debt remaining stable, banks have an incentive to keep stockpiling funds as AI needs increase.
“We expect all of the Big 6 banks to return to the market in 4Q, given the importance of funding to capture the opportunity that AI-related activity is generating,” they wrote. At the same time, potential delays in some tech-related initial public offerings may serve as a cap to issuance, they added.
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Banks traditionally come to market after reporting quarterly results. That seasonal earnings rush will kick off next week, with Wells Fargo & Co, JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. all set to report on Oct. 13, followed by Morgan Stanley and Bank of America Corp. the next day.
Year to date, these banks have borrowed $192 billion globally, up some 40% from the same time last year, with the full-year tally estimated at $233 billion, according to the Barclays strategists. For US banks as a whole, they now forecast full-year senior debt issuance of $294 billion, some 25% higher than their initial estimate and up from $240 billion in 2025.
Among the six banks, Goldman Sachs and Morgan Stanley, which have led 2026 issuance, may be the most active borrowers post earnings next week, said Bloomberg Intelligence analyst Arnold Kakuda.
While banks are particularly savvy when it comes to timing borrowing, a recent surge in benchmark borrowing costs may be a deterrent to adding on too much debt. Meanwhile, indications of growing credit concerns around the hyperscalers and other tech borrowers point to increasing unease over the piles of debt feeding the heavy spending on AI.
In a separate note, JPMorgan forecast $24 billion of supply among US banks in October, pointing out that Wells Fargo and Citigroup already tapped bond markets for $18 billion in so-called off-cycle issuance last month, with Citigroup .
“We don’t expect issuance from those names post earnings and do believe that Bank of America may also not tap the market – thus the bulk of issuance will be from MS and GS,” strategists including Kabir Caprihan wrote in a note dated Tuesday.
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