AI giants compete for Europe capital after $250 bn bond wave

Amazon, Alphabet, Meta and Oracle have issued about $250 billion of dollar bonds since early 2025, Deutsche Welle reported in a Nov. 3 news article citing AI Industry Reviews.

The borrowing matters for Europe because the four tech groups also sold €37 billion, or $41 billion, of euro bonds, making their dollar issuance more than six times larger, according to Atlas360 calculations.

Microsoft, described by Deutsche Welle as the last of the five largest hyperscalers to join the borrowing push, recently sold $25 billion of bonds, all denominated in dollars. Hyperscalers are large cloud-computing groups building data centres and infrastructure for artificial intelligence.

Goldman Sachs projects AI hyperscaler bond issuance will reach $420 billion in 2027, Deutsche Welle reported. ING expects about €60 billion of that amount to be issued in euros, adding supply to a market where governments and companies also borrow.

Viktor Hjort, global head of credit strategy at BNP Paribas, told Deutsche Welle that hyperscalers’ role in euro credit is “already high enough to create competition” within corporate debt and “between corporates and governments for available fixed income funds.”

The pressure is especially relevant for France, Germany and Italy, which Deutsche Welle said face unsettled sovereign-bond markets. France’s debt equals 119% of gross domestic product, a measure of economic output, and its deficit is above 5%.

Deutsche Welle reported that France’s 10-year yield climbed from about 3.7% to nearly 5% over six months. Its annual interest bill is €79 billion now and is set to rise to €91 billion next year and more than €100 billion by 2028.

European Central Bank economists said in an August blog post cited by Deutsche Welle that the euro bond market had so far handled AI borrowers, but they warned the trend “could make it harder for other companies and other economic sectors to access finance.” They also cited a “potential spillover to the sovereign and supranational segment of the bond market.”

Corporate borrowers may feel the same squeeze. Goldman Sachs analysts warned last week, according to Deutsche Welle, that interest costs as a share of sales for Stoxx 600 companies have risen by nearly half since 2022, cutting earnings by more than 5% over that period.

Evidence on local governments is still limited. A January study for the Organization for Economic Co-operation and Development compared local bond markets in Belgium, Germany, Spain, Sweden and Canada and found that areas with faster AI spread, measured by AI-related job vacancies, tended to have higher borrowing costs for cities and regions.

“Whereas in the United States, my research has found that AI investments are linked to a lower cost of borrowing for municipalities, the opposite appears to hold in several European countries,” Christos Makridis of Arizona State University’s W. P. Carey School of Business, a co-author of the OECD study, told Deutsche Welle.

In 2027, the test will be whether total AI hyperscaler bond sales reach Goldman Sachs’ projected $420 billion, including ING’s estimate of about €60 billion issued in euros.

In 2028, France’s annual interest bill is set to exceed €100 billion, Deutsche Welle reported, compared with €79 billion now.

Source: news article, Deutsche Welle, Nov. 3