BlackRock Fixed Income CIO: Quality AI Bonds More Attractive Than U.S. Treasuries

According to Yonhap News Agency, Rick Reed, Global Fixed Income Chief Investment Officer at BlackRock, the world's largest asset manager, stated that the recent scale of debt financing for AI infrastructure expansion is unprecedented, with related bonds offering greater appeal than US long-term Treasuries. In an interview with Bloomberg TV on Oct. 27, Reed noted that the magnitude of financing in bond and equity markets is unprecedented, describing the current environment as the most attractive investment period he has experienced. He highlighted a focus on high-quality bonds issued to finance GPUs, data centers, and other AI infrastructure, adding that the massive scale of new corporate issuance has made interest rate conditions superior to past years. He pointed out that while the US 10-year Treasury yield has exceeded 5%, it has been sidelined by other market instruments, with Treasuries increasingly viewed merely as a "market barometer" for equities. Investors can secure yields of roughly 7% by purchasing short-duration, single-A bonds, effectively avoiding the duration risk associated with long-dated Treasuries. He also expressed a preference for secured bonds issued by creditworthy corporates or cash-flow-generating assets, while maintaining that valuations in the semiconductor and computing sectors remain reasonably priced. Hyperscale data center operators are currently issuing the largest volume of corporate debt in history, raising hundreds of billions of dollars and absorbing capital that would otherwise flow into government bonds, thereby becoming one of the primary drivers pushing up US Treasury yields. Globally, AI-related high-quality financing has already surpassed $300 billion this year, roughly triple the total for all of last year.