AI data-center debt pushes US tech bond spreads to highest since 2003

According to data from Bloomberg cited by Wallstreetcn, the average bond funding cost for U.S. investment-grade technology borrowers, measured as a spread against the broader U.S. market, has reached its highest level since 2003. The same report states that spreads on U.S. technology corporate bonds have climbed to a three-year high, while spreads across the overall investment-grade market have stayed relatively stable, widening the funding cost gap between the tech sector and other issuers.

The report links the shift to expanding financing needs for AI infrastructure. Google, Microsoft, Meta, Amazon, and Oracle are raising money in the bond market to fund data center and compute buildouts. As issuance scales up, investors are demanding higher yields to compensate for potential credit risk and supply pressure. The report adds that U.S. technology firms are looking to spread their funding needs across different currencies and markets. BNP Paribas expects net supply of euro-area investment-grade corporate bonds to rise 83% in 2027 to EUR 192 billion (USD 214 billion), up from EUR 105 billion this year. No further updates on how these expectations have played out were provided.