Tech Giants' Bond Bonanza Threatens to Raise European Borrowing Costs
European Central Bank (ECB) analysts have warned that the soaring bond sales of US technology giants could increase European government borrowing costs. The massive financing needs of AI data centers are leading major US tech firms to issue euro-denominated debt, which may 'crowd out' appetite for European government bonds.
The five largest US tech companies - Alphabet, Amazon, Meta Platforms, Microsoft, and Oracle - now account for nearly 10% of euro-denominated debt issued by non-financial firms. Their share of euro-denominated 'reverse Yankees' - bonds issued by US firms in a foreign currency - nearly doubled between 2025 and 2026.
The analysts note that these companies are accumulating debt and accounting for a growing share of bond markets, which could have a spillover effect on the sovereign and supranational segment of the bond market. They warn that this could reshape bond markets in Europe, prompting issuers to offer higher yields to attract investors.
The report also suggests that investors may reduce holdings of 'safe' assets, including sovereign debt, to buy US tech bonds. This could further increase borrowing costs for European governments.