Tech Giants Offer High-Yield Bonds Above 7.5 Percent

Corporate America's top borrowers, particularly those driving the artificial-intelligence economy, are offering investors high yields on their bonds. As of October 5, 121 U.S.-listed bonds from major companies like Oracle, Meta, Amazon, Alphabet, Microsoft, and SpaceX yield over 6% to maturity. Oracle leads with 51 bonds, followed by Amazon, Microsoft, Meta, Alphabet, and SpaceX. Notably, only Oracle and SpaceX have bonds yielding above 7.5%.

The rise in bond yields is partly due to higher Treasury yields, which set the floor for corporate bonds. The 30-year Treasury yield stands at 5.63%, up about 39 basis points over the past month. Corporate bonds are priced at a premium over Treasuries, so when risk-free rates rise, corporate yields follow suit.

Among the highest-yielding bonds, Oracle's 6.85% bond maturing in 2066 offers an 8.45% yield, while SpaceX's 6.6% bond maturing in 2046 yields 7.84%. Meta, Amazon, Alphabet, and Microsoft also have bonds with yields ranging from 6.34% to 7.48%. The debt-to-capital ratios vary, with Oracle at 71.6%, Amazon and Meta at around 30%, and the rest below 25%.

Analysts note that these companies have room to borrow more, with J.P. Morgan estimating they could add about $1.5 trillion in debt before reaching average U.S. investment-grade leverage levels. However, S&P Global and Moody’s have raised concerns about rising leverage, particularly off-balance-sheet commitments to AI infrastructure, which total $969 billion for Alphabet, Amazon, Meta, Microsoft, and Oracle.