(Bloomberg) -- Investment-grade debt sales will outpace net issuance of US Treasuries this year, Apollo Global Management Inc.'s President Jim Zelter said, as the Magnificent Seven tech companies and others seek massive amounts of funding to fuel their expansion.
The prospect of a handful of mega-IPOs on the horizon — including Alphabet Inc.'s — highlights the breadth of US capital markets, Zelter added in a Bloomberg TV interview on Thursday morning.
"The scale of what you need to be relevant is much higher than it ever was before," he said. "These numbers are unprecedented, but it shows you the scale of the marketplace."
US investment grade bond sales hit the $1 trillion mark earlier this week, the quickest they've reached that milestone since 2020, on the back of a spending surge on artificial intelligence. The US Treasury has announced around $1.4 trillion in new cash this fiscal year from Treasury securities sales.
Investment-grade, private-credit and equity markets are all needed — not just to fund the boom in artificial intelligence, but the swelling capital requirements of industries from defense to utilities, according to Zelter. The range of investor appetite within global capital markets should ensure their needs are met, he added, but the real issue is how the immense demand for corporate capital impacts the market for government debt.
"You are seeing potentially long-term crowding out of this massive, long-duration capex boom around the globe and the impact on government debt yields," he said.
--With assistance from Gerson Freitas Jr. and Sydney Maki.
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