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AI financing surge sparks repricing of tech credit risk
Borrowers including Oracle, Broadcom and SpaceX have priced nearly $0.5 trillion of new debt this year, with credit insurance costs and bond market volatility rising.
The rush to fund artificial intelligence is rattling investors across the more than $10 trillion US corporate bond market, prompting a repricing of credit risk tied to some of the biggest technology companies, according to LiveMint Markets, citing Bloomberg data.
LiveMint Markets reports that the effect is showing up in spiking prices for credit insurance, heightened volatility, and weakening performance in parts of tech credit. The outlet also notes that Oracle Corp., Broadcom Inc. and SpaceX are among borrowers that priced nearly half a trillion dollars of new debt this year to build AI infrastructure.
LiveMint Markets adds that the overall tally is widely expected to increase sharply in the coming months and years, with Bloomberg calculations suggesting Broadcom alone could raise about $600 billion to finance computing power.
The outlet links the pressure on the sector to the scale of borrowing and uncertainty around the technology, alongside rising interest rates, while noting that tech has been among the worst performing sectors across credit in recent months.