Big Tech is issuing more bonds to pay for AI and data centers

In short: Big Tech companies are borrowing huge amounts in bond markets to help pay for AI, and it is reshaping parts of the corporate debt market.

What's going on

Big technology firms known as “hyperscalers”, meaning companies that run massive cloud and data center networks, are issuing far more corporate bonds than before. A corporate bond is basically an IOU that a company sells to investors, promising to pay interest and then repay the money later.

The Financial Times points to data from Goldman Sachs showing that US dollar “investment-grade” bond issuance, meaning bonds from companies seen as relatively likely to repay, has already passed $1.5 trillion so far this year. Goldman says 2026 is on track to beat the previous record set during the pandemic era. Average deal size is also growing, and there have been at least 20 deals of $10 billion or more.

A key change is why these large bond deals are happening. In the past, very large bond sales were often tied to mergers and acquisitions. Now, a large share is coming from tech companies raising money for AI-related spending, like data centers and the chips and equipment inside them.

The article also notes that Big Tech is issuing longer-term debt than the overall market. Think of it like taking out a longer mortgage instead of a shorter loan. Goldman estimates the average maturity in the broader US investment-grade market is 10.7 years, while bonds from the biggest tech issuers average much longer.

What to watch

If a few very large tech companies make up more of the bond market, investors and bond indexes can become more dependent on how those companies are doing, similar to how stock indexes can become dominated by a handful of big names. Some analysts also expect more borrowing to move into private deals instead of public bond markets, if public markets struggle to absorb the volume.

Source: Financial Times