AI The company announced over $1 trillion in deals this year, which certainly boosted market confidence, but also raised concerns about financial pressure.
So far this year, US artificial intelligence companies have issued more than $200 billion in bonds. (Goldman Sachs ) It was previously estimated that companies such as Meta, Alphabet, and Oracle had issued a massive $180 billion in bonds this year. Meta announced on Thursday that it will issue another $30 billion in corporate bonds.
This bond issuance size means that AI -related bonds account for more than a quarter of the total net supply of US corporate debt this year. Gordon Shannon, a fund manager at asset management firm TwentyFour, points out that the massive debt created by these highly rated technology companies will divert investors' demand for credit from other companies.
According to two sources familiar with the matter, Meta's latest bond issuance was met with overwhelming demand, reaching approximately $125 billion, setting a new record for the highest subscription amount for a U.S. corporate bond issuance. Oracle, which issued bonds in September... It was also oversubscribed.
However, Gil Luria, head of technology research at DA Davidson, warned that current AI bond prices are not too high, but these AI companies still need hundreds of billions of dollars in funding. If the market ultimately invests these hundreds of billions of dollars in rapidly depreciating assets with uncertain returns, this risk could escalate into systemic risk.
Systemic risk concerns
The artificial intelligence sector is entering a period of intensive investment, creating significant cost pressures. Meta points out that its capital expenditures next year will be significantly higher than in 2025. This is also prompting AI companies to accelerate their fundraising efforts.
However, a growing number of analysts are concerned about the concentration of capital in the artificial intelligence sector and the sustainability of capital expenditures by AI companies. (Barclays ) bank Analysts point out that although AI-related bonds are not the main driver of the US corporate bond market... However, several transactions this year show a trend that this situation is being significantly changed.
Fraser Lundie, global head of fixed income at Aviva Investors, said the surge in AI bond issuance raises concerns about concentration risk and capital expenditure sustainability, and given the longer maturities of bonds issued by tech groups, this could increase the sensitivity of the overall U.S. investment-grade credit market to interest rates.
Many fund managers have also warned that if concerns about an AI bubble materialize, there will be broader risks in financing the next phase of capital expenditures through capital markets rather than through companies' own cash flow.
Kevin Thozet, a member of the investment committee at asset management firm Carmignac, added that if this leads to more bad debt in the system, it could have serious consequences. Adding to the problem is that some of this debt was financed through private channels, making it even less transparent.
(Article source: CLS)
