Hyperscaler debt issuance: A technical opportunity in investment grade credit

The surge in AI hyperscaler debt issuance is creating a technical dislocation in investment grade credit rather than a broad deterioration in issuer quality.

• Hyperscaler issuance rose from $20 billion in 2024 to $136 billion in 2025 and $256 billion year-to-date in 2026, while estimated 2027 capex reached $968 billion versus $600 billion projected late in the previous year.
• Around 20%-25% of hyperscalers’ funding needs are being met through investment grade markets, lifting technology’s share of the Global Corporate Aggregate index to 8.4% from 6.7% in May 2024.
• Technology now contributes 0.5 years of the index’s 5.6-year spread duration, up from 0.4 years, and Oracle has become the largest risk contributor to global corporate indices; Meta, Google and Amazon have each entered the top 20.
• Supply pressure has pushed technology spreads to approximately two standard deviations cheap versus the US corporate index, while the issuers remain AA-rated with low leverage, strong earnings growth and solid cash flow generation.
• Hyperscalers are diversifying funding through non-US dollar issuance and structured vehicles, including $70 billion in benchmark-eligible SPVs and the $27 billion Meta/Beignet transaction; capex is estimated to add only 0.1x-0.2x leverage.

Takeaway: The author sees an attractive entry point in fundamentally strong hyperscaler credit because investor capacity constraints, rather than credit deterioration, are widening spreads, but recommends monitoring AI-related revenue forecasts, issuer concentration and the risks hidden in complex SPV structures.