Big Tech Floods Euro Bond Market, Raising Credit Risks
US tech giants such as Google and Amazon are flooding the eurozone bond market to fund their massive AI investments, which could reach $1 trillion by 2028. This influx of debt from big tech firms may push up borrowing costs for other sectors, including governments and supranational entities.
The European Central Bank has warned that US big tech companies could dominate bond markets, potentially leading to a credit risk increase. The blog post states that the volume of new debt issued by these firms could test investor appetite, while expectations of even greater bond supply may amplify this effect, lifting borrowing costs across the market.
Big tech firms already account for nearly 10% of gross new issuance in the euro zone bond market and have about $46 billion of bonds outstanding. Amazon and Alphabet have been the largest corporate issuers in the euro zone bond market this year.