After several years defined by higher rates and solid fundamentals, investors are now navigating a market increasingly shaped by the far-reaching effects of AI and new sources of supply. In this environment, knowing where (and how) to deploy capital with discipline will be critical to capturing value in the year ahead.
Credit Opportunities in 2026: From a Seller’s Market to a Buyer’s Market
Reflecting on 2025: The Year AI Came to Credit
For much of the year, markets were supported by solid fundamentals and strong technicals: limited new issuance, resilient growth, and steady demand from investors seeking yield. Even April’s bout of volatility faded almost as quickly as it appeared, a sign of the deep liquidity underpinning credit markets.
Later in the year, M&A activity rebounded. Lower financing costs and more favorable regulation reignited corporate deal-making, with record transaction volumes across technology, media, and communications. At the same time, the AI investment supercycle — massive capex programs from the world’s largest technology firms — began to reshape credit markets.
AI-driven capex, combined with a rebuilding M&A pipeline, is generating meaningful new supply and altering the technical backdrop that defined most of 2025. IG yields have drifted below 4.75%,1 and real-money demand is no longer absorbing every deal. The balance is shifting from a seller’s market to a buyer’s market.
Opportunities for Investors in 2026
2026 offers one of the broadest opportunity sets in a decade. Shifts in policy, corporate balance sheets, and capital needs are redrawing the credit landscape, from financing AI infrastructure to supporting the next wave of M&A. Here are the areas where we see the strongest opportunities taking shape.
1. Financing the AI Infrastructure Boom
Across the five major hyperscalers, more than $1.5 trillion in capex has been announced over the next five years.2 Apollo estimates that $300–$400 billion annually could be financed through debt markets, a scale that will fundamentally reshape corporate credit.
As these companies — Google, Meta, Amazon, Oracle and Microsoft — expand their issuance, the composition of the IG index will change dramatically. In early 2025, Google ranked as the 212th largest issuer in the US IG index; by 2030, it could be in the top 10. This shift introduces a new quasi-“risk-free” spread floor, as these AA- and AAA-rated issuers increasingly tap long-dated markets at roughly 5% yields.3
2. M&A and LBO Revival
Falling funding costs are reviving deal activity. The average leveraged loan cost dropped from about 10% to 7–7.5%, according to Apollo analysis. Coupled with more balanced valuations (the equal-weighted S&P 500 trades at materially lower multiples) LBO volume rose 40% year-over-year in late 2025.4
As sponsors take advantage of this window, investors can expect a surge in issuance across the credit spectrum: investment-grade, high yield and structured preferreds alike. Morgan Stanley estimates $2 trillion in total US IG issuance in 2026,6 fueled by both strategic and leveraged transactions.
3. Cross-Asset Portfolio Management
2026 will require a more integrated approach to risk. As hyperscalers and large corporates diversify their funding sources — from commercial real estate to asset-backed and private credit markets — holistic portfolio management becomes essential. The pace of change is striking: in the past quarter, five major issuers (Google, Meta, Amazon, Oracle and Microsoft) sold as much public IG debt as they had in the prior three and a half years combined.
4. Uncorrelated and Thematic Opportunities
As AI-driven concentration accelerates, opportunities in uncorrelated sectors can become increasingly vital. The sports industry, for example, remains over-equitized and underlevered: franchises sit at roughly 10% loan-to-value despite record valuations — creating attractive openings for hybrid and private capital to unlock liquidity and optimize balance sheets. In Europe, private credit expansion continues, with double-digit growth in deal activity across direct lending and asset-backed strategies in 2025.7
How Investors Can Seize These Opportunities
2026 is shaping up to be a buyer’s market — one that rewards active judgment, disciplined underwriting and strong origination.
We believe opportunities can be seized by:
- Adopting a cross-asset mindset. Analyzing risk in an integrated way across asset classes will become increasingly important given rising AI-driven concentration.
- Pursuing uncorrelated returns. Focus on sectors with distinct fundamental drivers.
- Integrating AI disruption analysis. Identify which businesses benefit from innovation, and which could face obsolescence.
- Maintaining underwriting rigor. “Measure three times, cut once” remains the core of Apollo’s credit philosophy.
Credit correlations are rising and default risk is diverging between high-grade issuers and leveraged names — evidence of a maturing but fragmented market. Navigating that complexity requires scale, insight, and access.
The Bottom Line
The opportunity ahead is clear: a broader, deeper, and more dynamic credit market that rewards expertise and access. For investors, 2026 represents a pivotal moment — to apply judgment, leverage data and capture value where public markets cannot.
Footnotes
- As of November 2025. Sources: Bloomberg, JP Morgan
- As of July 2025. Source: Morgan Stanley
- As of October 2025. Source: Bloomberg
- As of November 2025. Source: Bloomberg
- As of November 2025
- Sources, Apollo Analysts, “Cost of Equity and Capital (US),” NYU Stern School of Business, January 2025
- As of March 2025. Source: KBRA
