Demand for hyperscaler bonds is waning, as evidenced by Amazon's $25 billion bond offering

Interest in Amazon’s new bond offering was significantly weaker than the market had expected, Bloomberg reported. Amid a sharp increase in spending on AI infrastructure, the company issued $25 billion in investment-grade debt. However, peak demand for the bonds reached $62 billion before falling to $41 billion, sources told the agency. In other words, demand was only 1.6 times the size of the offering, whereas earlier this year, demand for corporate bonds in the U.S. exceeded supply by an average of four times, according to data compiled by Bloomberg.

Amazon had to offer investors a higher yield premium. According to the agency, this suggests that even demand for debt from top-rated hyperscalers no longer appears limitless. The new offering brought the total amount of bonds issued by the company over the past year to approximately $107 billion—more than any other tech giant, Bloomberg notes.

"Investors are still coming in on these deals, but the boom of the first wave of debt offerings by hyperscalers has clearly fizzled out," Tony Trzcinka, a portfolio manager at Impax Asset Management, told the agency.

The bond market has been literally flooded with bond offerings related to the development of artificial intelligence, Bloomberg notes. According to its calculations, following Amazon’s latest issuance, the total amount of debt raised by hyperscalers this year has reached approximately $335 billion—more than double the 2025 figure.

The sharp increase in supply has heightened concerns that investors are beginning to grow weary of this, the agency reports. Amazon’s offering led to a decline in the prices of existing tech company bonds on the secondary market: investors sold them to free up funds for the new bonds. Debt securities issued by Amazon, as well as SpaceX, Alphabet, Nvidia, Meta Platforms, and Oracle. The spread on Amazon’s 5.65% coupon bonds maturing in 2046 widened by approximately 21 basis points to 97 basis points. The spread on Google’s 5.75% bonds maturing in 2066 increased by 12 basis points to 98 basis points, according to TRACE data cited by Bloomberg.

“Today, investors are selling hyperscaler bonds for the same reason people sell one house before buying another: they need to free up capital,” John Lloyd, a portfolio manager at Janus Henderson Investors, explained to Bloomberg. “The difference is that there are already plenty of hyperscaler bonds on the market, and most portfolios are well-positioned with them.”

This article was AI-translated and verified by a human editor