"This year, these five "hyperscalers" have issued $121 billion in debt, including $27 billion alone to fund Meta's new data center in Richland Parish, Louisiana, Seliger said in a research note dated November 17. Amazon also issued $15 billion in new debt on November 17. To put that $121 billion in perspective, it's more than four times the average level of debt ($28 billion) issued by these companies annually over the previous five years."
"The sudden influx of these investment grade (IG) corporate bonds onto the market has increased their "spread": The gap between the interest yield on bonds from these companies, compared to the market as a whole, Seliger said in the note. The yield on Oracle's debt is trading at 48 basis points (0.48%) higher than the rest of the market. Not surprisingly, this deluge of supply has widened hyperscaler spreads materially."
""What was a very simple story is suddenly getting a lot more complex," she said."
Amazon, Google, Meta, Microsoft, and Oracle issued $121 billion of debt this year, including $27 billion for a new Meta data center in Richland Parish, Louisiana, and $15 billion issued by Amazon on November 17. That issuance is more than four times the five-year annual average of $28 billion. The influx of investment-grade corporate bonds widened spreads versus the broader market, with Oracle's yield trading about 48 basis points higher and notable spread widening for ORCL, META, and GOOGL. Another $100 billion of debt is expected next year. Debt financing for AI and data centers has complicated the tech investment case despite ample cash flow.
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