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

On Oct. 27, according to Yonhap News Agency, Rick Reed, Chief Investment Officer for Global Fixed Income at BlackRock, the world's largest asset manager, stated that the scale of debt financing recently conducted for AI infrastructure expansion is unprecedented, making related bonds more attractive than long-dated U.S. Treasury bonds. In an interview with Bloomberg TV on Oct. 27, Reed noted that the sheer scale of financing in the bond and equity markets is unprecedented, calling the current period the most attractive investment environment he has ever experienced.

He highlighted his focus on high-quality bonds issued to finance GPUs, data centers, and other AI infrastructure, noting that the massive volume of new corporate issuance has created interest rate conditions superior to historical norms. He pointed out that while the yield on the 10-year U.S. Treasury has surpassed 5%, it has been marginalized by other market instruments, with Treasuries now viewed more as a "market benchmark" for equities; investors can secure yields of around 7% by purchasing short-term single-A rated bonds while avoiding the duration risk associated with long-dated Treasuries.

He also expressed a preference for secured bonds issued by high-quality corporates or assets capable of generating cash flow, and noted that valuations for stocks in the semiconductor and computing sectors are at reasonable levels. Currently, hyperscale data center operators are issuing the largest volume of corporate bonds in history, raising hundreds of billions of dollars and diverting capital away from Treasuries, which has become one of the primary factors driving up U.S. Treasury yields. Globally, the scale of high-quality AI-related financing has surpassed $300 billion this year, approximately three times the annual total from last year.