Big Tech's five giants now account for a record one-fifth of all corporate bond issuance
Investment-grade corporate debt (bonds issued by companies to borrow money, rated as having stable repayment capacity) issued by US companies this year reached a record $1.88 trillion. One-fifth of that went to five big tech firms — Amazon, Google, Meta, Microsoft, and Oracle — a sign that the tech giants are raising massive amounts of money to fund their artificial intelligence (AI) investments.
A signal released the same day suggested borrowing costs could climb higher. With US job growth in October more than doubling expectations, talk of a Fed rate hike in December resurfaced, pushing the 10-year Treasury yield to the 4.8% range and the 30-year to the 5.2% range. The following week, October consumer prices rose 0.4% month-over-month, beating the 0.3% forecast, while core inflation rose 0.3%, also above expectations.
According to financial data provider LSEG, the five companies issued $107.3 billion in investment-grade corporate bonds last year. By early October this year, that figure had more than doubled to $218.1 billion, and by early November it had surpassed $370 billion. The reason cash-rich, highly profitable companies like Microsoft and Google are taking on debt is that AI investments have grown to the hundreds of billions of dollars, making it difficult to cover them with cash flow alone. Bond issuance also offers the advantage of matching 20- to 30-year financing with data centers that will be used for 20 to 30 years, while preserving cash.
However, when everyone borrows at the same time for the same reason, investors demand higher yields — and if AI expectations sour, bond prices could be shaken all at once. Even so, large issuances have been met with heavy subscriptions, and the supply has been absorbed. What has changed is that investors have started to scrutinize whose bonds they are buying.
The starkest contrast is between Microsoft and Oracle. Microsoft holds a top-tier AAA credit rating, with roughly $67 billion in free cash flow and about $40.3 billion in borrowings (around $128.8 billion including leases) for fiscal 2026 — leaving plenty of room. Oracle, by contrast, was downgraded in July by S&P Global Ratings to BBB-, the lowest rung of investment grade. Oracle posted $67.4 billion in revenue for fiscal 2026, with cloud accounting for about half, but free cash flow came in at negative $23.7 billion for the same period, with total debt around $130 billion — the gap is being filled with borrowings.
The market prices in this difference through credit default swap (CDS) spreads. Oracle's 5-year CDS hit a record high of 325 basis points (bp) in October and stood at around 298bp on November 6. Amazon, Google, and Meta also saw their CDS levels hit record highs, but remained below Oracle's — a sign that company-specific credit risk premiums are widening.
One tier below big tech sit the lower-rated players: neocloud companies that build data centers and rent out computing power. Leading player CoreWeave carries roughly $50 billion in debt and holds a B+ rating from S&P, several notches below investment grade. In mid-October, yields on its 2031-maturity bonds topped 16%, and its CDS exceeded 1,000bp. Its order backlog stood at $104 billion as of the end of June. Third-quarter revenue announced this week grew 168% from a year earlier, and the company raised its full-year revenue outlook, but interest costs nearly tripled. The company has said it will not issue unsecured bonds at current rates until 2027.
In a report last month, Moody's noted that capital expenditures by the five US big tech firms and CoreWeave will approach $1 trillion combined by 2027, and that AI borrowing is rapidly expanding the private credit market. Of 607 mid-sized corporate borrowers Moody's examined, 17% were using payment-in-kind (PIK) structures that add interest onto debt instead of paying it in cash. The agency also warned that with maturities concentrated in 2027-2029, weaker credits would have to refinance at even higher rates. Hwang Jong-deok, Money Today's North America bureau chief, analyzed on 'Let美Inside' that the strains in the neocloud and private credit markets could be transmitted to the Korean stock market the fastest.
