Sovereign bonds shouldered aside as AI takes their turf
TLT•Broadcom is reportedly lining up $50 billion in financing to buy equipment for OpenAI, while SpaceX is seeking $30 billion in investment-grade debt and $10 billion in bank loans to buy Nvidia chips. Ten-year Treasury yields rose to 5.31% in Asia.
1. AI firms seek financing
Broadcom is reportedly lining up $50 billion in financing to buy equipment from OpenAI, while Oracle is also seeking an unspecified amount. Sources say SpaceX is looking to issue $30 billion in investment-grade debt and take out $10 billion in bank loans to buy Nvidia chips.
2. Concerns over borrowing
SpaceX raised $86 billion in its June IPO and then sold $25 billion in bonds. Nvidia holds a stake worth around $21 billion in SpaceX. Some analysts said debt financing could help SpaceX scale without diluting stock, while others raised concerns about chipmakers financing buyers of their products. SpaceX's five-year CDS spread widened almost 15 basis points to a record.
3. Treasury yields edge higher
Ten-year Treasury yields rose to 5.31% in Asia after falling from an overnight high of 5.3645%, following strong demand at the latest note auction. Investors were watching whether yields around 5.70% would attract similar bids at a 30-year Treasury auction.
