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Big Tech's AI debt is becoming more expensive:
Spreads on US investment-grade technology bonds have widened to roughly 110 basis points in November, up from around 80 basis points in October, their highest in at least 2 years.
In other words, investors are demanding higher premiums as concerns over AI profitability, record capital spending, leverage and data-center returns intensify.
Meanwhile, Meta issued $25 billion in bonds on November 3rd, with its 2056 notes priced 2.2 percentage points above Treasuries, almost 0.9 percentage points wider than its April deal.
The sale formed part of a broader funding push, including $25 billion in common stock and $12.5 billion in preferred stock, alongside plans to raise up to $60 billion through an at-the-market equity program.
Meta's $25 billion bond sale was below the $25 billion-plus offerings that had become standard, while Oracle's latest US dollar bond sale totalled just $10 billion.
Overall, global investment-grade companies and projects have borrowed more than $415 billion this year.
The AI debt binge is facing higher investor demands.