Even after adjusting for inflation, big tech companies are issuing more bonds than during the late 1990s. And the companies aren't just refinancing existing debt-they're taking on additional debt. "While the increasingly aggressive (and creative) borrowing by AI companies won't be their downfall, if they do fall short of investors' expectations and their stock prices suffer, their debts could quickly become a problem," Zandi wrote.
Even as this trend has taken hold, the spread of the investment grade bond markets over treasuries, in aggregate, has gone from about 70 basis points to about 85 basis points today. I would anticipate that if the hyperscaler debt issuance theme continues, we could see spreads widen as much as 95 basis points, which is material when we're talking about a relatively low volatility market,