"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,"
"The growth of the U.S. corporate bond markets net new issuance [of debt] is about $600-$800 billion per year. And hyperscaler issuance could increase that number by 20%,"
"While the degree of public company leverage remains small, a continued shift toward debt financing would increase the macro risks associated with the AI build-out,"
Big hyperscaler companies — Amazon, Google, Meta, Microsoft, and Oracle — have taken on $121 billion in debt year-to-date, compared with an average of $28 billion over the previous five years. Increased debt-funded capital expenditure for AI infrastructure elevates macroeconomic and market-level risk. Excluding Oracle, hyperscalers could theoretically increase combined indebtedness by about $700 billion. Annual U.S. corporate bond market net new issuance runs roughly $600–$800 billion, so hyperscaler issuance could boost that by about 20%. Extra debt supply has pushed investment-grade spreads over Treasuries from about 70 basis points to about 85 basis points and could widen toward 95 basis points. Investors are demanding higher yields to compensate for the added risk.
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