Foreign demand for US corporate bonds rises as investors favor tech over financials, Citigroup says

• Demand for bonds with maturities over 15 years surged to 44.1% of total purchases in 2026 from 23.7% in 2025, driven by global pension and insurance investors
• Hong Kong holdings increased 19.4% following regulatory changes, while Canada, Japan, Norway, Taiwan and Kuwait also showed large inflows since February 2025
• U.S. companies dominate the $11.6 trillion top-rated corporate bond market in the U.S. and Europe, with positive rating actions for tech firms like American Tower and Analog Devices due to AI infrastructure buildout

Summary: Foreign Demand for US Corporate Bonds Shifts to Tech and Long-Duration Debt

Foreign investors have maintained strong demand for U.S. investment-grade corporate bonds for 15 consecutive months through April 2026, according to Citigroup analysis. However, a notable sector rotation is underway, with overseas buyers favoring technology, media, and telecom (TMT) debt while reducing exposure to financial bonds.

Key Trends:

Demand for bonds with maturities exceeding 15 years surged to 44.1% of total purchases in 2026, nearly double the 23.7% recorded in 2025. This shift aligns with primary market trends as investors seek longer-duration credit exposure.

Geographic Flows:

U.S. corporates experienced the largest inflows since February 2025 from Canada, Japan, Norway, Taiwan, Kuwait, and Hong Kong. Hong Kong holdings notably increased 19.4% following regulatory changes.

Credit Quality Improvements:

Citigroup highlighted positive rating actions for several tech-focused companies—American Tower, Analog Devices, Keysight Technologies, and Cadence Design Systems—attributing improved credit profiles to AI infrastructure buildout.

Market Context:

This sustained foreign interest contrasts with recent concerns about rising corporate debt levels, particularly at companies funding aggressive AI expansion plans. However, Citigroup emphasized that U.S. companies dominate the $11.6 trillion investment-grade corporate bond market across the U.S. and Europe, particularly in long-dated issuance.

Strategic Implications:

The analysis suggests structural advantages for U.S. assets, with Citigroup noting that "global investors seeking long-duration credit exposure have no viable alternatives at scale," reinforcing barriers to rotation away from U.S. corporate bonds. This positions U.S. issuers favorably with pension and insurance investors requiring long-term, high-quality debt instruments.