"That's the warning from Wall Street and investors, if the recent pace of mega bond offerings from the likes of Alphabet Inc. and Meta Platforms Inc. continues in 2026. These sales have capped a record year of global issuance. With tech firms expected to turn to debt for as much as $1.5 trillion by 2028 to fund expansion in artificial intelligence and data centers, that could widen spreads across the whole market, Morgan Stanley argues."
"Bond buyers are starting to worry about being compensated for the risks of a bubble in the sector, given recent turmoil in tech stocks. Our biggest concern is that a flood of data center financing could cause supply indigestion, particularly in dollars, but with euro markets also absorbing part of the funding needs, said JPMorgan Chase & Co. strategist Matthew Bailey. Investors are now questioning whether these massive investments in artificial intelligence will pay off."
"There are no broad signs of panic in credit, with many of the sales so far having come from top-tier names. Alphabet raised $17.5 billion in the US and 6.5 billion ($7.5 billion) in Europe, the second-largest corporate deal in the region this year, while Meta sold $30 billion and Oracle Corp. did $18 billion. Demand was huge, with Meta getting a record peak orderbook of $125 billion."
Big Tech is issuing record volumes of bonds to finance AI and data center expansion, with firms potentially taking on as much as $1.5 trillion of debt by 2028. Major deals from Alphabet, Meta and Oracle have driven global issuance to new highs and attracted huge demand, but bond investors worry about compensation for sector risks amid tech-stock turmoil. Strategists warn that concentrated data-center financing could cause supply indigestion in dollar and euro markets. High-yield and lower-quality issuers are also entering the space, raising concerns that a glut of weaker credits could strain the market.
Read at www.mercurynews.com
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