BondCliQ CEO Chris White suggests that the surge in debt issued by hyperscalers to fund AI infrastructure may be driving up borrowing costs for the US government. According to White, many bonds from these tech giants have seen their trading spreads widen within six months of issuance, signaling that investors are becoming more cautious about the long-term credit outlook for the sector.
The market is showing signs of skepticism toward specific players. White highlighted CoreWeave, which accounts for approximately 5 percent of the $258 billion in AI-linked debt issued over the past year. Unlike Oracle, whose debt spans decades, CoreWeave faces refinancing pressure within five to seven years, making it more vulnerable to fluctuations in short-term interest rates.
Apollo Global chief economist Torsten Slok has also noted rising costs for default insurance on hyperscaler debt, attributing this to deteriorating credit fundamentals. While Microsoft remains the only hyperscaler with a AAA credit rating, White believes that if the company were to offer more favorable bond terms, competitors would be forced to match them to attract capital.
White argues that institutional investors are unlikely to repeat past buying patterns as they demand higher yields to compensate for perceived risks. He suggests that this trend could extend beyond the tech industry, potentially influencing the broader credit market and impacting the cost of borrowing for the US government itself.
