Amazon, Alphabet, Meta, Oracle, and Nvidia have issued approximately $220 billion in investment-grade bonds so far in 2026, surpassing the total for all of 2025. S&P Global estimates hyperscalers and related entities like Nvidia have issued $225 billion, marking a nearly 974% increase from the previous year. This massive influx of debt, primarily to fund AI infrastructure, is causing credit markets in various currencies, including Swiss francs, Canadian dollars, and sterling, to strain under the demand. Approximately $62 billion of this year's hyperscaler debt has been issued in non-dollar currencies, a 50% jump from 2025.
The large bond issuances by these tech giants are leading to higher borrowing costs for other companies. Investors in markets like Swiss franc or Canadian dollar corporate bonds are demanding higher yields to absorb the significant volume of paper from a single sector. The European Central Bank has raised concerns about the impact of hyperscaler issuance on market functioning for smaller borrowers. Spreads on two- to four-year bonds from Amazon, Alphabet, Meta, and Oracle have widened to about 40 basis points over comparable Treasurys, up from 30 basis points in 2025, while five- to seven-year spreads have climbed to roughly 60 basis points from 50. Nvidia alone sold $25 billion in bonds, its first debt sale in five years, to fund its AI buildout.
SoftBank is also contributing to the reordering of debt markets with a planned junk bond sale of up to $20 billion to refinance a $40 billion bridge loan for its OpenAI stake. SoftBank's BB+ rating means this debt will be priced at a significant premium. This situation highlights how the AI boom's financial plumbing is moving yields against even investment-grade hyperscalers and creating a rising AI-adjacent premium for riskier borrowers. While these tech companies generate enormous free cash flow and are not at risk of default, the credit markets are visibly straining under the weight of AI capital spending, forcing every other issuer to pay a "hyperscaler tax."
In related developments, the US corporate bond market appears safer on paper due to the high-rated tech companies selling debt. AA and A rated bonds now account for 52% of Bloomberg's US investment-grade bond index, up from about 46% in 2021. However, some investors fear this perceived safety is illusory. The largest builders of AI data centers have doubled their debt load to $350 billion in the last five years. Furthermore, a century-old private bond market is seeing a surge in activity, with companies like IREN Ltd. selling $2.1 billion in private placements to institutional investors like insurance firms. This massive wave of corporate bond supply is also raising concerns about potential disruption to passive credit funds, which increasingly hold these bonds.
