AI Financing Floods Bond Market, Rivaling US Treasury

Nvidia and other tech giants are now a significant force in the bond market, rivaling the U.S. Treasury's debt issuance.

The AI buildout by these companies has led to a surge in special-purpose vehicle (SPV) and corporate bond issuance, with debt from hyperscalers like Microsoft, Amazon, Alphabet, Meta, Oracle, and Alibaba now accounting for nearly 70% of total U.S. Treasury duration supply.

This is up from just 1% in 2023, and represents a significant shift in the way these companies are financing their AI spending, which is no longer being funded solely by operating cash flow.

The increased demand for long-dated debt could put pressure on yields and credit spreads, or require more attractive pricing to attract buyers.