Hyperscalers Issue Record AI Debt

Corporate borrowing tied to artificial intelligence is rapidly increasing, with major technology companies, known as hyperscalers, issuing large volumes of debt in multiple currencies to fund their extensive spending on chips, cloud infrastructure, and data centers. Companies such as Amazon (company) and Alphabet Inc. have collectively issued $60 billion in multi-currency bonds over the last 12 months, setting new records in markets like the Europe, United Kingdom — Pound sterling, Japan — Japanese yen, Canada — Canadian dollar, and Switzerland — Swiss franc. This diversification aims to tap a wider pool of investors and prevent saturation in the United States market. Bankers, including those from Morgan Stanley, are also developing innovative financing methods, such as lease-backed deals for data centers, exemplified by Stingray Compute's $810 million note backed by a lease to Amazon (company). Despite the surge, demand for these high-quality bonds remains strong, though investors and analysts from firms like Crossmark Global Investments, Barclays, and Manulife are beginning to question the market's long-term absorption capacity.