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AI debt, municipal bonds offer opportunities amid market volatility: Goldman Sachs

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AI debt, municipal bonds offer opportunities amid market volatility: Goldman Sachs

Business News Tech AI AI debt, municipal bonds offer opportunities amid market volatility: Goldman Sachs

As we look ahead, credit markets are expected to present promising investment opportunities, especially in the realms of artificial intelligence debt and municipal bonds. The scenario is bolstered by attractive yields from high-quality corporate debt, coupled with low volatility in the markets, providing a strong basis for portfolio hedging. Investors are actively seeking robust borrowers amidst sector-specific trends driven by AI-related borrowing and increasing interest rates.

Credit markets could offer fresh investment opportunities through the end of 2026, with higher yields creating opportunities in high-quality artificial intelligence (AI) debt and municipal bonds , while low market volatility makes portfolio hedging attractive, according to Goldman Sachs. Alex Finston, co-head of US and Asia Credit Trading at Goldman Sachs FICC and Equities, said credit markets had remained resilient despite rising interest rates, increased AI-related borrowing and differences in performance across sectors. Speaking on the firm's 'The Markets' podcast, Finston said investors continued to show strong demand for high-quality corporate debt , particularly during periods of market weakness, and expected opportunities to emerge as companies approach the end of the year with financing requirements.

"I think there's three that are top of mind," Finston said, identifying high-quality AI credit, portfolio hedges and municipal bonds as key areas of interest. He said recent market volatility had created an opportunity to buy high-quality AI-related debt at higher yields than seen in some time. He also pointed to low implied volatility as a favourable environment for investors looking to hedge their portfolios.


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