Corporate America is turning to the convertible bond market at a record pace as artificial intelligence-related companies fuel strong demand for debt instruments that can later convert into equity.
US convertible bond issuance reached around $34 billion during the first four months of 2026, according to data from Bank of America Global Research and Barclays Research.
The figure is more than double the amount recorded during the same period last year and places the market on track to surpass the previous full-year record of more than $120 billion set in 2025.
Analysts said the surge highlights how companies tied to AI are increasingly relying on convertible debt to fund major infrastructure expansion while investors remain eager for exposure to the sector.
AI spending drives issuance growth
Roughly half of this year’s convertible issuance is linked in some way to AI-related projects, according to analysts.
Companies are using the proceeds to finance data centres, cloud infrastructure, power expansion, and other capital expenditure tied to AI development. Some firms are also refinancing debt issued during the pandemic-era funding boom of 2020 and 2021.
“A lot of it is to build out capital expenditure, particularly AI, and that’s unusual and not something we’ve seen in previous cycles,” said Michael Youngworth, managing director and head of global convertibles at Bank of America Securities.
Several large issuers have already entered the market this year.
Oracle raised $5 billion through a convertible offering, while cloud infrastructure company CoreWeave issued $4 billion.
Australia-based data centre company IREN Limited also raised $2.6 billion.
The trend has extended beyond technology firms.
NextEra Energy raised $2.3 billion through convertibles, while chipmaker On Semiconductor secured $1.3 billion.
Analysts said refinancing activity is also contributing to the issuance boom.
Companies that issued convertible debt during the pandemic years are now approaching the standard five-to-six-year maturity cycle.
Recent refinancing deals include a $1.5 billion offering from Duke Energy and a $900 million issuance from Microchip Technology.
High-rate environment boosts appeal
Market participants said convertibles have become increasingly attractive because traditional borrowing costs remain elevated while equity issuance risks dilute shareholders.
Convertible bonds pay fixed coupons like traditional debt, but can later convert into equity if a company’s stock reaches a predetermined price.
That conversion feature allows investors to benefit from potential stock gains while still receiving bond-like protection.
The structure has proven particularly attractive for companies involved in AI expansion, where large upfront investment needs continue to rise.
Healthcare technology firm Tempus AI recently raised $400 million through a six-year convertible bond with zero coupon and no principal increase at maturity.
The company said the bonds would convert into shares if the stock price climbs to $69.26, around 40% above the share price level when the deal was issued earlier in May.
Analysts noted that strong investor demand has continued despite market volatility and rising Treasury yields.
Benchmark 10-year US Treasury yields remain at a 16-month high, increasing borrowing costs across fixed-income markets.
Investor demand widens market participation
According to Venu Krishna, managing director and head of US equity strategy at Barclays, hedge funds and large asset managers continue to dominate the convertible bond investor base.
Krishna said hedge funds are seeking to capture relative value from the implied volatility embedded within convertibles, while long-only investors are using the instruments to gain exposure to AI-linked sectors.
Equity optionality remains especially attractive in AI-related industries where investors see strong upside potential even when company credit profiles remain weak.
The strong appetite has also encouraged companies with riskier financial profiles to enter the market.
In January, WhiteFiber raised $230 million through a five-year convertible bond offering aimed primarily at funding data centre expansion.
The company went public in August 2025 and currently carries a negative forward price-to-earnings ratio of around 36.
However, according to LSEG data, its share price implies an enterprise value of roughly 19 times forward EBITDA, above peer levels, suggesting investors expect strong future growth.
WhiteFiber shares have risen nearly 60% so far in 2026.
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