Nomura’s McElligott highlights $300B market chaos potential from autocallable structures

Charlie McElligott, Nomura’s Cross-Asset Macro Strategist, is flagging a risk that most market participants are probably not thinking about enough: more than $300 billion in autocallable structures, primarily linked to mega-cap tech stocks, sitting in the derivatives market like a loaded mechanism waiting for the right trigger. That concern arrives alongside a debt binge in the AI and datacenter space that has no modern precedent. Year-to-date issuance from AI companies, hyperscalers, and datacenter operators has reached $269 billion, roughly 12 times the annual average from 2015 to 2024. The debt machine running at full speed Broader corporate debt issuance has climbed 61% year-over-year. But the AI and datacenter cohort is driving the bus, absorbing capital markets bandwidth at a pace that dwarfs everything else in the fixed-income universe. Morgan Stanley had projected $250 billion to $300 billion in hyperscaler issuance for 2026. At $269 billion through mid-August, that range is essentially already met with more than four months left in the year. But McElligott’s concern isn’t really about whether these companies can service their debt. It’s about what happens in the plumbing o...