UBS On-Air: Market Moves Top of the Morning: Fixed Income - Keeping a credit eye on AI
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Feb 27, 2026 Leslie Falconio, Head of Taxable Fixed Income Strategy for the Americas, and Barry McAlinden, Senior Fixed Income Strategist for the Americas, discuss AI’s influence on credit markets. They compare tech issuance with bank supply. They examine investment-grade fundamentals, rising dispersion, February drivers of yields and sentiment, and CIO positioning favoring securitized over corporates.
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Investment Grade Supply Driven By Financials Not Tech
- Investment-grade supply has been large this year but dominated by financials, not hyperscaler tech issuers.
- Barry McAlinden notes tech issuance was more measured (Oracle and Alphabet in February) which helped markets digest supply.
Hyperscalers Offer High Quality With Tighter Spreads
- High-quality hyperscalers now trade closer to the IG index so investors can capture strong credits without sacrificing much spread.
- Barry highlights Microsoft at AAA and other AA-rated hyperscalers reducing spread premium demand.
Credit Stress Is Dispersion Not Broad Deterioration
- Fundamentals are strong with earnings and growth supporting credit, so widespread IG deterioration isn't expected.
- Barry warns credit volatility reflects dispersion and higher risk premia in specific sectors like high yield and loans.