Goldman Sachs Group Inc.’s head of credit strategy, Amanda Lynam, warned that a surge of US high-yield bond supply is overwhelming investors, pushing risk premiums to the highest level in five months. September issuance reached $38.51 billion, the busiest month this year, driven by deals like Soft Bank Group Corp.’s $10 billion offering and Paramount Skydance Corp.’s planned $44.4 billion borrowing. The extra yield investors demand on junk bonds over Treasuries widened to 294 basis points, the highest since April, while CCC-rated notes hit 968 basis points, the highest since November 2023.

Goldman noted nearly $600 billion of AI-related debt supply this year, with only 40% from hyperscalers, indicating broad exposure. Average US high-grade bond spreads widened to 80 basis points, close to Goldman’s Q3 forecast of 85 basis points. The firm prefers BBB-rated bonds, citing fatigue in the AI debt market.

Lynam cautioned that rising rate volatility could reduce investor confidence in corporate credit, a key factor keeping spreads anchored.