This article first appeared on GuruFocus.
Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) are moving deeper into credit markets just as investors ramp up protection against the debt wave tied to artificial intelligence spending. The three hyperscalers have been added to S&P Dow Jones Indices’ latest CDX Investment-Grade Index, a 125-company benchmark that investors use to hedge credit risk or express views on corporate debt. The index is refreshed every six months, and their inclusion reflects how central these issuers have become to US credit markets. Barclays strategist Jigar Patel noted that the shift could make the index a more accurate representation of the broader corporate bond landscape, while also highlighting how much more active credit derivatives tied to technology companies have become.
That backdrop is being driven by record debt issuance from hyperscalers funding AI infrastructure, which has helped fuel a surge in trading activity across credit default swaps. Contracts linked to individual high-grade technology firms were largely unavailable a year ago, but are now among the most actively traded US derivatives outside the financial sector, according to Depository Trust & Clearing Corp. The index reshuffle, now under S&P Dow Jones Indices following S&P Global’s acquisition of IHS Markit, also removes issuers that fall to junk status and typically boosts trading as investors rotate into the new on-the-run series.
Oracle (NYSE:ORCL) stands out within this shift, with its credit default swaps ranking as the most liquid among investment-grade names and averaging more than $830 million in weekly trading, according to S&P Dow Jones Indices citing DTCC data. At the same time, the cost of insuring Oracle’s debt has climbed since September, at one point reaching levels last seen in 2009 amid concerns around AI-related spending.
