Big Tech Debt Now Equals 13% of Long-Term Treasuries

Alphabet, Amazon, Meta, Microsoft, and Oracle have drastically increased their share of the long-term debt market. Bonds from these companies with maturities exceeding 10 years now account for 13% of the total volume offered by the U.S. government for equivalent terms. This figure stood at just 1.5% at the start of 2024.

A study by the Bank for International Settlements highlights that the share of these companies in the long-term corporate debt market has jumped from 3% to 24%. This shift reflects the multibillion-dollar cost of supporting the expansion of artificial intelligence infrastructure. Through September, the group raised $222 billion in their own bonds.

Financial vehicles outside the balance sheets of these companies have also injected between $75 billion and $100 billion into the market. These instruments are primarily placed with non-bank financial institutions. This sector frequently holds large volumes of government bonds and high-quality corporate assets.

Analysts observe that the increase in the supply of long-term paper may raise the compensation investors demand to carry duration risk. Although the impact on Treasury yields has been limited so far, the persistence of this fundraising pace is concerning. Upward movements in long-term interest rates could become more persistent if the supply of private debt continues to grow.