{"id":198658,"date":"2025-12-22T20:59:12","date_gmt":"2025-12-22T20:59:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/198658\/"},"modified":"2025-12-22T20:59:12","modified_gmt":"2025-12-22T20:59:12","slug":"ai-spending-spree-drives-global-tech-debt-issuance-to-record-high","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/198658\/","title":{"rendered":"AI spending spree drives global tech debt issuance to record high"},"content":{"rendered":"\n<p class=\"yf-7hmkaz\">By Patturaja Murugaboopathy<\/p>\n<p class=\"yf-7hmkaz\">Dec 22 (Reuters) &#8211; Global technology companies have ramped up debt issuance this year to record levels, as an intensifying race to build <a href=\"https:\/\/tech.yahoo.com\/ai\/\" data-ylk=\"slk:artificial intelligence;elm:context_link;itc:0;sec:content-canvas\" class=\"link \" rel=\"nofollow noopener\" target=\"_blank\">artificial intelligence<\/a> capacity forces even \u200bcash-rich firms to borrow heavily to fund that investment.<\/p>\n<p class=\"yf-7hmkaz\">According to Dealogic data, global tech \u200ccompanies issued $428.3 billion of bonds in 2025 through the first week of December. U.S. firms accounted for $341.8 billion, while European \u200cand Asian tech companies issued $49.1 billion and $33 billion, respectively.<\/p>\n<p class=\"yf-7hmkaz\">Traditionally reliant on internal cash flows, large tech firms have increasingly turned to debt, as borrowing costs are low and investor demand is strong.<\/p>\n<p class=\"yf-7hmkaz\">Michelle Connell, president at Portia Capital Management, said debt-funded AI capex reflects a structural shift, as rapid technological obsolescence and \u2060short chip lifespans force companies to \u200creinvest continuously.<\/p>\n<p class=\"yf-7hmkaz\">The heavy issuance, however, has begun to lift leverage and weaken coverage ratios for some firms, raising questions about how balance sheets would hold \u200dup if AI investments fail to deliver expected returns.<\/p>\n<p class=\"yf-7hmkaz\">That said, the biggest tech firms are generally profitable, have large cash buffers and a number of them rank among the world&#8217;s most valuable by market capitalisation.<\/p>\n<p class=\"yf-7hmkaz\">A Reuters analysis \u200bof more than 1,000 tech firms with market capitalisations of at least $1 billion shows their \u200cmedian debt-to-EBITDA ratio rose to 0.4 at the end of September, nearly double the level seen during the 2020 debt surge. While leverage remains below levels typically viewed as alarming, the increase suggests debt is rising faster than earnings, which can pose a risk if cash flows fail to keep pace.<\/p>\n<p class=\"yf-7hmkaz\">The median operating cash flow-to-total-debt ratio also fell to a five-year low of 12.3% in the \u2060second quarter before recovering modestly later in the year.<\/p>\n<p class=\"yf-7hmkaz\">Credit \u200bmarkets have begun to reflect rising investor caution. Five-year CDS \u200bspreads on Oracle have nearly doubled to 142.48 basis points over the past two months, while <a href=\"https:\/\/www.yahoo.com\/organizations\/microsoft\/\" data-ylk=\"slk:Microsoft;elm:context_link;itc:0;sec:content-canvas\" class=\"link \" rel=\"nofollow noopener\" target=\"_blank\">Microsoft<\/a>\u2019s spreads have climbed to about 35 basis points from \u200daround 20.5 at the end \u2060of September.<\/p>\n<p class=\"yf-7hmkaz\">&#8220;I view this phenomenon as the result of an overheated marketplace that has created its own self-serving narrative \u2014 go big or go home in terms of stock price,&#8221; said \u2060Scott Bickley, an advisory fellow at Info-Tech Research Group.<\/p>\n<p class=\"yf-7hmkaz\">&#8220;This is neither sustainable nor repeatable as a permanent shift in \u200coperating modes for the hyperscalers.&#8221;<\/p>\n<p class=\"yf-7hmkaz\">(Reporting By Patturaja Murugaboopathy; with additional reporting by Gaurav Dogra in \u200cBengaluru; Editing by Amanda Cooper and Alexandra Hudson)<\/p>\n","protected":false},"excerpt":{"rendered":"By Patturaja Murugaboopathy Dec 22 (Reuters) &#8211; Global technology companies have ramped up debt issuance this year to&hellip;\n","protected":false},"author":2,"featured_media":198659,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[345,343,344,66067,112387,85,46,112388,125,62024],"class_list":{"0":"post-198658","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-cash-flows","12":"tag-debt-issuance","13":"tag-il","14":"tag-israel","15":"tag-portia-capital-management","16":"tag-technology","17":"tag-technology-companies"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/198658","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=198658"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/198658\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/198659"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=198658"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=198658"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=198658"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}