Hyperscalers’ AI debt binge widens 2035 bond spread to 1.05 points, raising equity risks
AI Market Summary
Rising bond issuance by AI hyperscalers is pushing credit spreads wider, with 2035 maturities yielding ~5.7% and spreads over 10Y Treasuries up to 1.05pp, while CDS costs for Oracle and Alphabet have increased. Higher yields and wider spreads can tighten financial conditions and raise the hurdle rate for equities. With hyperscalers comprising ~20% of S&P 500 market cap, credit stress could pressure broader index valuations.
Impact level
● High
Affected assets
NCSISP5002USD/USDT-0.87%
AI Insight · NCSISP5002USD/USDTAI Insight
▼ Bearish
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An AI investment boom among the five largest hyperscale tech companies has pushed up perceived credit risk in their bonds. Hyperscalers’ outstanding bonds maturing in 2035 now yield 5.7%, with the spread over the 10-year U.S. Treasury widening to 1.05 percentage points from 0.44 percentage points a year earlier, according to LSEG data. Credit default swap costs for Oracle and Alphabet have also risen sharply, even as U.S. Treasury yields climbed to their highest level since 2007.
