By Yoruk Bahceli
LONDON, June 1 (Reuters) – From Europe to Japan and Switzerland, huge bond issues by Big Tech companies are proving that smaller markets, often overshadowed by the U.S., can punch above their weight in the $40 trillion world of corporate debt.
Google-parent Alphabet is already one of the biggest outstanding borrowers in the sterling and Swiss franc corporate bond markets, while Amazon raised 14.5 billion euros ($16.88 billion) in March from an eight-part deal, the largest ever in the euro corporate bond market, according to LSEG.
Debt issues by so-called “hyperscalers” – or Big Tech companies – outside the United States are part of a push to diversify their funding early on, bankers said, as they look to finance trillions of dollars of investment in AI infrastructure, especially data centers, in the years ahead.
Raising debt in foreign currencies can also help the companies hedge the currency risk from their global assets, while taking advantage of relatively lower borrowing costs in places like Europe.
Alphabet smashed records across markets, with its yen, Canadian dollar, Swiss franc and sterling deals all setting borrowing records in those 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.
In Europe, Alphabet and Amazon have helped push up borrowing by non-financial U.S. firms to over 60 billion euros ($69.85 billion) this year, another record.
RECORD DEBT SALES
Morgan Stanley expects around 50 billion euros of total borrowing from the hyperscalers in euro debt this year, which could help lead the U.S. to overtake France as the euro zone’s biggest source of overall corporate debt.
“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.
With the hyperscaler deals, internationally placed non-financial corporate bond sales tracked by LSEG have surged in markets like the Swiss franc and yen this year.
The ability to raise significant amounts of money in such markets has not gone unnoticed by U.S. companies beyond the hyperscalers, Servidea said.
“They’re definitely looking at other markets more seriously than they would have previously.”
