AI-related debt binge may pressure European bond markets
TLT•European tech-related debt issuance has reached $39.3 billion this year, and BNP Paribas expects euro investment-grade corporate bond net supply to rise 83% to €192 billion in 2027. Investors say heavier issuance could increase borrowing costs for companies and governments.
1. Issuance accelerates
US technology companies are increasingly tapping European investors to fund AI spending. European tech-related debt issuance totals $39.3 billion so far this year, up about 5% year on year, while issuance in the United States has exceeded $250 billion, up 81%. An investor estimates €40 billion to €60 billion of European issuance is in the pipeline.
2. Supply forecasts rise
BNP Paribas expects euro-denominated investment-grade corporate bond net supply to rise 83% to €192 billion in 2027, from €105 billion this year. Offshore issuance by US companies is forecast to make up around €80 billion to €90 billion of the total, with hyperscalers accounting for most of it, BNP Paribas’s Giulio Baratta said.
3. Potential market pressure
Investors and analysts say large deals could compete with other highly rated borrowers for demand, widen credit spreads and raise funding costs. European companies are already favouring shorter maturities, according to investors. European Central Bank President Christine Lagarde said hyperscaler debt issuance had contributed to rising sovereign bond yields.
