Large technology companies, including Meta Platforms, Nvidia, and Amazon.com, have issued a record $182 billion in investment-grade bonds year-to-date in 2026 to fund their aggressive AI infrastructure expansion. This represents a 1,300% year-over-year surge and accounts for approximately 15% of total US corporate bond issuance so far this year. This significant borrowing spree has led to increased caution among fixed-income investors, driving up the cost to insure Big Tech debt against default.
The 5-year credit default swap (CDS) spreads on major tech companies like Oracle, Amazon, Google, and Microsoft have risen to about 75 basis points, nearing their highest levels in at least seven years. Even excluding Oracle's unique debt profile, CDS spreads for this group are at approximately 49 basis points, the highest since at least 2018. This indicates a profound shift where investors are demanding more protection against the credit risk associated with these tech giants as they prioritize compute infrastructure over pristine balance sheets.
Investor demand for hyperscaler bonds is waning; cover ratios, which measure investor demand relative to supply, have dropped from 5x in February to just 2x in July, according to Apollo Global Management. This suggests that these companies may face higher borrowing costs in the future if they continue to issue bonds at the current pace. Morgan Stanley estimates that AI-related global debt issuance reached $236 billion as of May 31, a fourfold increase from the prior year, with projections for it to grow to $570 billion by the end of 2026. However, some analysts, like UBS, predict a slowdown in hyperscaler capital expenditure growth, from 76% this year ($673 billion) to only 25% next year and 6% in 2028, partly due to increasing capital market pressures and local opposition to data center construction.
