Not only in the United States, but the global issuance of technology bonds is also surging

A capital expenditure race driven by artificial intelligence is pushing global tech giants into the debt market at an unprecedented pace, reshaping the credit bond landscape from the United States to Europe. Despite the record scale of bond issuance, analysts point out that its impact on the overall credit bond market spread may be quite limited.

The U.S. market has been the first to feel this wave. Industry giants including Meta, Alphabet, and Oracle have recently raised a total of over $70 billion. So far, the annual issuance of U.S. investment-grade tech bonds has surged 115% year-on-year, reaching $211 billion, with its share of the total issuance in the investment-grade market hitting a multi-year high in October.

The impact of this trend is far from over. It is predicted that if capital expenditure expectations for ultra-large-scale data centers are realized by 2026, the public investment-grade credit bond market could see an additional $140 billion to $175 billion in new bond supply, while the private market will absorb at least $100 billion to $125 billion in financing.

This wave of bond issuance is not unique to the U.S. Data shows that the issuance of tech bonds in major global credit bond markets is growing in sync, covering investment-grade and high-yield markets in Europe, as well as the rapidly expanding private credit bond sector. This indicates that funding for AI infrastructure has become a common financial theme across the global tech industry.

AI Arms Race Drives Trillions in Capital Expenditure

The direct driving force behind the large-scale bond issuance by tech giants stems from massive investments in AI infrastructure. Analysts predict that the total capital expenditure of the top six ultra-large-scale data center operators will soar from approximately $260 billion in 2024 to nearly $600 billion by 2026.

To fund this enormous expenditure plan, companies are actively turning to the bond market. Recent landmark transactions include Meta's issuance of $30 billion in bonds, Alphabet's $24 billion bonds, and Oracle's $18 billion bonds. These massive financings have driven the issuance of U.S. investment-grade tech bonds to surge 115% year-on-year, reaching $211 billion, with ultra-large-scale data center operators contributing $80 billion.

This round of issuance has significantly increased the tech sector's weight in the credit bond market. In October of this year, the proportion of tech bonds in the total issuance of U.S. investment-grade bonds soared from 7% in June to 34%, setting a multi-year high. Although the total issuance in the investment-grade market has remained flat compared to the same period last year, the issuance in the tech sector has nearly doubled.

Bond Issuance Boom Spreads from the U.S. to the World

In line with the trends in the U.S. market, tech companies worldwide are ramping up their bond issuance efforts. Data shows that issuance activity in the tech sector has significantly increased across multiple major credit bond indices. Compared to the same period last year, the issuance of tech bonds in the U.S. high-yield market rose from $27 billion to $40 billion, in the European investment-grade market from $6 billion to $35 billion, and in the European high-yield market from $13 billion to $22 billion

In most markets, the rolling annual average of technology bond issuance as a proportion of the total index has exceeded the average level of the past five years, particularly prominent in the U.S. investment-grade market. At the same time, the private credit bond market has also become an important financing channel for technology companies. From the beginning of 2025 to now, technology issuers have raised approximately $120 billion through the private market, surpassing the full-year total of $88 billion in 2024 and $53 billion in 2023. Additionally, there are over $40 billion in project financing and infrastructure deals in recent quarters that have not been accounted for.

However, the surge in issuance has also raised concerns about concentration risk. Data shows that this year, the top five issuers accounted for about 50% of the total U.S. investment-grade technology bond issuance.

Impact on Credit Spreads May Be Limited

Despite the impressive scale of bond issuance in the technology sector, historically, peaks in issuance for specific industries are not isolated incidents and have not caused sustained negative impacts on the market.

Similar issuance waves have occurred in multiple industries. For example, in 2015, the healthcare sector saw a surge in bond issuance due to the Affordable Care Act reforms and merger activities (such as AbbVie’s acquisition of Pharmacyclics); in 2013 and 2017, the telecommunications sector experienced increased issuance due to large-scale transactions like Verizon's acquisition of Vodafone's stake and AT&T's merger with Time Warner. The technology sector itself also experienced a similar cycle from 2014 to 2017 due to the expansion of 4G LTE networks and cloud infrastructure construction.

Looking back at these periods, the annual issuance volume in related industries averaged an 83% year-on-year increase, but did not lead to sustained poor performance of their bonds. Data shows that in the 12 months following the peak of issuance, the average spread of these industries relative to the investment-grade index actually narrowed by about 2 basis points.

Based on historical experience, analysts believe that the current wave of technology bond issuance will have a “negligible” impact on the overall investment-grade index spread. For the technology sector itself, the impact will be “limited to moderate,” depending on the scale of issuance, duration, and market sentiment regarding AI prospects. Therefore, analysts maintain their year-end predictions of a 90 basis point spread for U.S. investment-grade bonds and a 325 basis point spread for high-yield bonds