The intense issuance of AI-related bonds has triggered "indigestion," forcing Wall Street to rethink its allocation strategies.

When BlackRock raised billions of dollars in debt financing for a data center for Meta, there was one type of investor that the asset management giant aimed to avoid: those seeking quick profits. According to informed sources, to shield the deal from the cooling of the AI-related bond market, underwriters deliberately prioritized so-called "real money" investors, such as pension and insurance funds, during the bond placement. These institutions typically buy and hold long-term, unlike more frequent trading investors whose quick in-and-out strategies could quickly drag down the bonds' performance in the secondary market. This is a defensive measure taken after a reversal in investor preferences. As tech companies ramp up borrowing, buyers are increasingly concerned that massive AI spending may ultimately not yield corresponding returns.