The artificial-intelligence financing boom has begun to challenge war, hopes for a Middle East peace deal and the midterm elections as the year's biggest bond market catalyst. Five hyperscalers have issued $271 billion in debt this year, and Invesco's Matt Brill says nearly every dollar borrowed since the beginning of the year now costs more to secure.
The AI financing boom has begun to rival war, peace-deal hopes and the midterm elections as the year's biggest catalyst for the bond market. For much of 2026, bond yields moved higher together with oil prices, especially when fears of an intensification of the Iran war increased.
Hyperscalers lean on debt
Many of the tech giants leading the AI buildout, with the exception of Microsoft, have already burned through their free cash flow. That leaves tech more reliant on borrowing.
The market's five hyperscalers, Microsoft, Meta, Amazon.com, Alphabet and Oracle, issued $271 billion in debt already this year, Goldman Sachs credit analyst Amanda Lynam said in a Tuesday client note. Meta was looking to raise about $15 billion from the U.S. portion of its cross-currency bond deal on Tuesday.
Borrowers pay more
Matt Brill, head of North America investment-grade credit at Invesco, said on Tuesday: "The competition for capital has been so fierce that everyone is paying up to borrow." He added that nearly every dollar the hyperscalers borrowed since the beginning of the year now costs more to secure.
Oracle's 10-year bonds earlier this week priced to yield about 8%. Microsoft's bonds issued late last week were around 5.5%. Meta's 10-year bonds were expected to price closer to 6.5%.
Treasurys feel the pressure
On days when hyperscalers have large bond deals in the market, Treasurys often have come under selling pressure, resulting in higher bond yields. By contrast, since late October, investors have been flooding into the roughly $32 trillion U.S. Treasury market for safety on days when tech stocks dropped sharply.
The benchmark 10-year Treasury yield rose 5.8 basis points to 4.951% on Tuesday, its biggest daily climb since Sept. 28, according to Dow Jones Market Data.
Source: MarketWatch
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