Foreign demand for U.S. investment-grade corporate bonds has maintained its robust momentum for 15 consecutive months, a trend highlighted by Citigroup’s recent analysis. Overseas investors are significantly reallocating portfolios, increasingly favouring debt from technology, media, and telecom (TMT) companies, alongside longer-maturity bonds, while reducing exposure to financial sector debt. This strategic pivot occurs amidst broader market concerns regarding rising corporate debt levels in some U.S. firms, exemplified by Oracle’s investor scrutiny over its substantial AI infrastructure expansion funding plans.
Citigroup’s note, dated April 27, detailed this shift: TMT corporate bond purchases by foreign investors rose to 26.1% in 2026 from 17.1% in 2025. Concurrently, financial debt exposure decreased to 39% from 53.8%. TMT companies operate across diverse digital sectors from software to communications infrastructure. Their bonds fund operations and strategic initiatives in these evolving industries. Demand for bonds exceeding 15-year maturities also surged, reaching 44.1% of total purchases in 2026, up from 23.7% in 2025. Key inflows since February 2025 originated from Canada, Japan, Norway, Taiwan, Kuwait, and Hong Kong, with Hong Kong holdings seeing a 19.4% increase post-regulatory changes.
The rotation is partly driven by improved credit profiles among several U.S. companies, including American Tower, Analog Devices, Keysight Technologies, and Cadence Design Systems, primarily due to their involvement in AI infrastructure buildout. Citigroup underscored that global investors seeking long-duration credit exposure have limited viable large-scale alternatives, reinforcing U.S. assets’ structural appeal. U.S. companies largely comprise the $11.6 trillion in top-rated corporate bonds across the U.S. and Europe, and are major issuers of long-term bonds, making them highly attractive to global pension and insurance investors.
