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Big Tech bond sales are reshaping risk in the US corporate market
Tech debt from six leading companies now has a larger effect on US high-grade bond risk, measured by duration times spread, than the biggest banks.
Big Tech’s push to finance AI investment is triggering a steady wave of corporate bond issuance and is increasingly influencing how investors gauge risk in the US credit market, LiveMint Markets, citing Bloomberg, reports. The effect is showing up in a portfolio risk metric called duration times spread, which combines exposure to interest rates with credit spread risk.
According to Barclays strategists, the six biggest tech companies account for 8.6% of the DTS for the US high-grade corporate market, based on data as of July 23. That compares with 7.3% for the six largest banks in the Bloomberg US Corporate Bond Index, according to the same analysis, highlighting the growing role of hyperscalers in overall market returns.
The story notes that investors have previously found comfort in the fact that the biggest tech firms represent a relatively small share of total outstanding principal, about 4% including privately placed Rule 144A bonds, while the biggest banks are about 9% by market value. However, hyperscalers can be riskier for portfolios because they often borrow over longer periods, and weaker bond performance can still hurt even without defaults, LiveMint Markets says.
The article points to fears that AI spending may not generate sufficient returns, citing Alphabet’s raised capital spending forecast for 2026 and the prospect of additional AI-related bond supply, including a Meta tied data center project due to sell bonds next week. It also cites concerns already visible in the market, including widening tech credit default swaps and corporate bond spreads amid skepticism over whether large AI-driven debt levels will pay off, with John Fekete of Crescent Capital warning that concentration risk could ripple across the broader bond market.