From sterling and Swiss francs to euros and yen, the latest wave of large corporate bond offerings by leading technology firms is reshaping the landscape of non-U.S. corporate debt markets. Alphabet and Amazon are among the hyperscalers that have used foreign-currency issuance to mobilize funds for sizeable capital programs connected to AI-related infrastructure, notably data centers, while also diversifying funding and managing currency exposure.
Alphabet has emerged as a dominant borrower in several smaller currency markets, becoming one of the largest outstanding issuers in both sterling and Swiss franc corporate debt. In March, Amazon executed an eight-part euro transaction that raised 14.5 billion euros, LSEG data shows, the largest single deal ever recorded in the euro corporate bond market.
Bankers who worked on the transactions say the moves are part of an early strategy to secure financing for the multitrillion-dollar investments hyperscalers expect to make in AI infrastructure over coming years. Selling bonds in a range of currencies can also serve as a natural hedge for the companies' international assets and allow them to take advantage of lower borrowing costs available in some markets.
“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, a bank that led deals for both Alphabet and Amazon.
Record issuance and market depth
Market participants point to a widening of capacity in markets that historically were not considered large enough for very big capital raisings. John Servidea, global co-head of investment-grade finance at JPMorgan, which also led recent hyperscaler deals, said: “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.”
Morgan Stanley has estimated that hyperscalers could borrow roughly 50 billion euros in the euro market this year. That level of activity could be significant enough to make the United States the single biggest source of corporate debt issuance in the euro zone, potentially overtaking France in that role, according to the same projection.
The impact of the hyperscaler transactions is visible in market data. Internationally placed non-financial corporate bond sales tracked by LSEG have spiked in currencies such as the Swiss franc and the yen during the year. Borrowing has also picked up in the Australian and Hong Kong dollars as companies broaden their funding options. Observers say this expansion has not gone unnoticed by other U.S. corporates, which are increasingly evaluating these markets as viable alternatives to traditional dollar issuance.
“They’re definitely looking at other markets more seriously than they would have previously,” Servidea said, referring to U.S. companies beyond the hyperscalers that are exploring foreign-currency bond markets.
Funding strategy and investor demand
Hyperscalers’ issuance outside the dollar has risen sharply. Bank of America reports that non-dollar issuance by these companies has doubled to 30 percent of their total bond funding so far this year. One practical effect of raising funds abroad is that these companies can postpone returning to the U.S. corporate debt market for longer periods, at times securing comparable or lower borrowing rates than those available domestically.
Heavy issuance can, however, exert pressure on a borrower’s existing bonds. Analysts have observed that hyperscaler credit performance has lagged the overall U.S. corporate bond market in some stretches. Executives at banks involved in the deals say one way hyperscalers have managed this is by keeping proceeds in the currency in which they were raised rather than immediately swapping them back to dollars. BNP Paribas’ Baratta noted that the issuing companies were mainly retaining funds in the currencies of issuance.
Investors are also adapting. Some managers are using European bond markets to increase exposure to technology names that historically had limited presence there. Nicolas Forest, chief investment officer at Candriam, is among those who have been purchasing euro-denominated deals from hyperscalers to gain tech-sector exposure in the European corporate bond market.
By late April, Alphabet had climbed to the fourth-largest borrower in ICE BofA’s sterling corporate bond index after just one issuance round, and into the sixth spot in Swiss franc benchmarks, reflecting how quickly a major technology issuer can change the profile of regional bond indices.
Broader market implications
As technology-sector issuance grows outside the United States, the fortunes of corporate bond markets in other currencies will become more closely linked to developments in the tech industry, including progress or setbacks in AI deployment. David Zahn, head of European fixed income at Franklin Templeton, cautioned that the increasing presence of tech borrowers could translate into higher volatility in those markets if there are problems related to AI: “If there are any problems with (AI), it will probably create more volatility.”
For now, the hyperscaler strategy of tapping diverse currency markets while building AI-related capacity is reshaping where and how corporate debt is priced and distributed globally, even as investors and issuers weigh the trade-offs between diversification, funding costs, and market impact.