Major technology corporations are demonstrating that international bond markets can compete with U.S. dominance in the massive $40 trillion corporate debt sector, with record-breaking debt offerings spanning from Europe to Asia and Switzerland.
The parent company of Google, Alphabet, has emerged as one of the largest active borrowers in both sterling and Swiss franc corporate bond markets. Meanwhile, Amazon completed a massive 14.5 billion euro ($16.88 billion) fundraising effort in March through an eight-part transaction, marking the largest euro corporate bond deal ever recorded, based on LSEG data.
These international debt offerings by major technology firms, known as “hyperscalers,” represent a strategic effort to broaden their funding sources early in their expansion plans, according to banking professionals. The companies are preparing to finance massive AI infrastructure investments worth trillions of dollars over the coming years, with particular focus on data center construction.
International currency borrowing also allows these corporations to protect against currency fluctuations from their worldwide operations while capitalizing on comparatively lower interest rates in regions such as Europe.
Alphabet established new benchmarks across multiple markets, with its transactions in yen, Canadian dollars, Swiss francs, and sterling all breaking previous borrowing records in their respective currencies.
“If you look at the pace of investment of these companies and if you fast forward 12 months, some of these companies are already going to become among the biggest issuers globally in any currency,” said Giulio Baratta, co-head of investment-grade finance at BNP Paribas.
Within Europe, both Alphabet and Amazon have contributed to pushing borrowing by non-financial American companies beyond 60 billion euros ($69.85 billion) this year, establishing another new record.
Morgan Stanley projects approximately 50 billion euros in total hyperscaler borrowing in euro debt this year, potentially positioning the United States to surpass France as the euro zone’s largest source of corporate debt overall.
“A lot of these markets, including euro, have evolved and now offer a lot more depth and opportunity for larger capital raising than was historically the case,” said John Servidea, global co-head of investment grade finance at JPMorgan, which led recent deals for the two hyperscalers.
International corporate bond sales tracked by LSEG have experienced dramatic growth in markets including Swiss franc and yen this year, driven by these major technology deals.
Other American companies beyond the technology sector are taking notice of these successful large-scale international fundraising capabilities, according to Servidea.
“They’re definitely looking at other markets more seriously than they would have previously.”
Corporate borrowing has also increased significantly in currencies including Australian and Hong Kong dollars as international companies seek diverse funding options.
Investment professionals are simultaneously focusing on reducing dependence on U.S. dollar investments due to geopolitical concerns and policy uncertainties.
According to Bank of America data, hyperscalers have increased their non-dollar bond issuance to 30% of total bond funding this year, doubling from previous levels.
International fundraising enables major technology companies to extend intervals between accessing U.S. markets, JPMorgan’s Servidea explained, while securing interest rates that are sometimes lower than U.S. dollar markets, or at minimum comparable.
Extensive borrowing can negatively impact a borrower’s existing bonds, and market analysts observe signs that hyperscalers are underperforming compared to the broader U.S. corporate bond market. Reducing frequency of U.S. market access may help minimize this negative effect.
BNP Paribas’s Baratta, whose firm also managed transactions for Alphabet and Amazon, indicated these companies primarily retain funds in the currencies they raise rather than converting them back to dollars.
Investment professionals are eager to gain exposure to artificial intelligence themes in international bond markets, where technology companies previously maintained limited presence.
Nicolas Forest, chief investment officer at Candriam, is purchasing euro-denominated deals from hyperscalers to increase technology sector exposure within European bond markets.
By April’s conclusion, Alphabet had already achieved fourth-largest borrower status in ICE BofA’s sterling corporate bond index following just one issuance round, and sixth-largest position in Swiss francs.
As technology sector issuance expands, corporate bond markets outside the United States will face increased exposure to technology sector developments, both positive and negative.
“If there are any problems with (AI), it will probably create more volatility,” said David Zahn, head of European fixed income at Franklin Templeton.
