Long-term bond yields have climbed to their highest levels in 15 years or more across most major advanced economies, as rising government debt concerns and heavy borrowing by artificial intelligence companies add pressure to global funding markets. The Organisation for Economic Co-operation and Development (OECD) identified the trend in its September 2026 Interim Economic Outlook, warning that stronger competition for long-term funding is pushing up the returns investors demand to hold longer-dated bonds.

The OECD said concerns over the sustainability of government finances, combined with increased corporate bond issuance by AI companies, are contributing to higher market yields and a rising term premium. The term premium represents the additional return investors require for holding longer-term bonds rather than shorter-term securities. With AI companies committing billions of dollars to data centres, cloud infrastructure and computing capacity, demand for long-term financing is adding another layer of pressure to already elevated borrowing costs.

The impact could extend beyond bond markets. The OECD warned that increased reliance on debt and increasingly complex financing structures among AI companies could heighten financial risks if investor sentiment changes sharply. AI-related firms are also facing high expectations for future earnings, with analysts forecasting rapid growth will be needed to justify current valuations. A weaker-than-expected earnings performance could therefore slow investment in the sector and put pressure on companies and industries benefiting from the AI investment boom.

Major technology companies are already turning to debt markets to fund the enormous cost of expanding their AI infrastructure. Oracle, for instance, had planned to raise between $45 billion and $50 billion through debt and equity financing to expand its cloud infrastructure and meet growing demand from AI customers. SpaceX has also sought substantial funding through the bond market, with plans to raise $25 billion for AI infrastructure investment, underscoring the scale of capital required to support the sector’s expansion.

For global investors and governments, the combination of AI borrowing, rising sovereign debt and higher long-term yields creates a more challenging funding environment. Higher yields mean governments and companies may have to pay more to borrow over longer periods, potentially increasing financing costs across the economy. The OECD’s warning also highlights a key risk surrounding the AI boom: if expected earnings fail to materialise quickly enough, a pullback in investment could ripple through financial markets and industries closely linked to the technology spending cycle.

source: nairametrics