Royal Bank of Canada is expanding its credit derivatives trading business in the US and Europe, betting that multibillion-dollar fundraising for artificial intelligence will fuel demand for hedging products. The Toronto-based lender sees growing opportunities as technology companies raise massive capital for AI infrastructure, creating new corporate debt that investors want to protect against defaults. RBC's move reflects a broader Wall Street push to capture fees from the AI spending surge, which has driven record bond issuance from data center operators and chipmakers.

The bank's credit trading desk has been adding personnel and technology to handle increased flow in credit default swaps and index products. Analysts note that AI-related debt often carries longer maturities and higher leverage, making hedging more critical for institutional holders. RBC's expansion positions it to compete with JPMorgan, Goldman Sachs, and Morgan Stanley in a market where AI-driven issuance could exceed $200 billion annually within three years.