2026 Credit Outlook: From Scarcity to Selection—The Return of a Buyer’s Market

Apollo

Research

20 Pages

While economic growth in the US remains sufficient to support most corporate and consumer fundamentals, the balance of power in credit is changing. After years defined by scarcity, markets are moving into a higher-supply environment, driven primarily by AI-related investment and a revival in M&A, setting the stage for greater dispersion, rising selectivity, and improved opportunities for buyers of credit.

Date published: January 2026

Data as of December 2025. Source: Bloomberg
Data as of November 2025. Source: JPMorgan Leveraged Loan Index

Key Takeaways

AI is now the dominant source of incremental credit supply: Hyperscaler investment has already tripled since 2023, with cumulative AI-related spending expected to exceed $2.7 trillion from 2025 to 2029. As internal cash flows fall short, debt financing across IG, private credit, project finance, CRE, and ABS will increasingly shape issuance patterns and market correlations.
M&A is returning at scale: The resurgence in M&A reflects a supportive alignment of lower financing costs, workable valuations, ample private equity dry powder, and a more supportive policy environment.
The cycle is defined by dispersion, not distress: Economic growth is narrowing rather than weakening, concentrating among higher-income consumers and large, AI-exposed corporates.
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