Big tech companies are issuing $6 billion in bonds, pushing the global bond market close to exceeding $2 trillion.

The AI ​​competition is reshaping the global financial markets, as tech giants rush to issue bonds, raising over $60,000 billion. Analysts predict global bond issuance could surpass $2 trillion for the first time this year.

June 29, 2569 at 16.08:XNUMX a.m., Reuters reported that The continued strong trend in artificial intelligence (AI) investment has driven major technology companies worldwide to raise massive amounts of capital through the bond market. Investment banks are having to devise new fundraising models to meet the ever-increasing demand for capital.

Soaring spending on computing chips, cloud computing, and data centers has led large technology companies, or hyperscalers, like Amazon and Alphabet, to increasingly raise funds through multi-currency bond issuances instead of relying solely on the US dollar market. This is done to expand their investor base and reduce the risk of raising large sums of capital in a single market.

Over the past 12 months, Amazon and Alphabet have issued more than $60,000 billion in bonds combined, in multiple currencies including euros, yen, pounds, and Canadian dollars.

Teddy Hodgson, co-head of global fixed income at Morgan Stanley. It was stated that both Alphabet and Amazon have diversified their fundraising into Europe, Canada, and Asia, resulting in global bond markets setting several new records.

Amazon raised €14.5 billion in March through eight bond issuances, the largest private equity offering in eurozone history. Meanwhile, Alphabet set new records with bond issuances in yen, Canadian dollars, Swiss francs, and pounds sterling, as well as a 100-year bond—the first by a tech company since 1997.

BNP Paribas analysts estimate that hyperscalers will invest approximately $725 billion in AI this year, nearly double the amount projected in mid-2025. With spending growing faster than operating cash flow, the company needs to rely more on external sources of funding.

Meanwhile, the bank is also developing a new fundraising tool for AI startups and data center operators, using pre-arranged data center leases as collateral to ensure future cash flow, even if construction projects are not yet complete.

A recent example is Stingray Compute, a subsidiary of Cipher Digital, which raised $810 million through bond issuance, secured by an Amazon data center lease, resulting in oversubscription of the bonds by nine times.

Morgan Stanley stated that this type of fundraising began to be used last year. And currently, there are around 15 transactions completed in the high-yield bond market.

Although the market currently has high liquidity and investors continue to show interest in AI company bonds, experts are beginning to question how long the market can absorb further increases in bond issuance.

Hodgson predicts that the global value of investment-grade bond issuance could surpass $2 trillion in 2569 for the first time in history if investment in AI continues.

side Victoria Fernandez, Head of Market Strategy and Fixed Income Portfolio Manager at Crossmark Global Investments. It was stated that bonds issued by Hyperscalers remain popular due to their strong credit ratings and high liquidity. However, if these companies raise funds in the market too frequently, investors may begin to worry about their increasing debt burden.

As some companies begin issuing additional common shares to raise funds, investors are watching to see how much more borrowing technology companies will need in the future to support the massive investments still required in AI.

However, data from Barclays indicates that AI-related bonds in the U.S., while accounting for nearly 15% of all investment-grade bond issuance, are still relatively small compared to the total bond market value, and there are no signs of market saturation.

Jeff Given, head of developed market fixed income at Manulife Investment Management, believes that as long as hyperscalers and data center operators continue to expand their investments in AI, the demand for capital and investor interest will remain strong.

refer : reuters.com

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