Amazon Issues $25B Bonds as Big Tech Debt Raises Wall Street Concerns

Big Tech companies are raising concerns on Wall Street as they accelerate bond issuance to fund artificial intelligence investments, with credit risk potentially underpriced according to Morgan Stanley. Amazon issued $25 billion in bonds this week, drawing investor demand of approximately $62 billion. The surge in corporate debt comes as technology giants expand capital expenditures for AI infrastructure, prompting warnings from portfolio managers about excessive borrowing levels in the sector.

Morgan Stanley portfolio manager Vishal Khanduja stated in a recent broadcast that Big Tech is borrowing too much and that credit risk is currently undervalued in the market, according to Business Insider. Khanduja expressed surprise at Amazon's latest bond offering, noting that many expected the company to halt borrowing this year after significant corporate bond issuances in the first half.

Amazon Issues $25 Billion in Bonds This Week

Amazon completed a $25 billion corporate bond offering this week. The issuance attracted approximately $62 billion in investment demand, representing roughly twice the offering amount.

Investor Demand Declines from March Issuance

The recent bond offering saw reduced demand compared to Amazon's March issuance. In March, Amazon issued $37 billion in corporate bonds, which attracted approximately $126 billion in investor demand—more than three times the offering amount. The current demand of $62 billion for the $25 billion offering indicates cooling investor appetite relative to the earlier issuance.

Big Tech Bond Issuances Reach $159 Billion Through May

Big Tech companies are expanding debt levels as capital expenditure forecasts for AI infrastructure construction surge this year. According to the Kobeishi Letter, corporate bonds issued by Amazon, Meta, Alphabet, and Oracle from early this year through May totaled $159 billion. Khanduja identified the massive supply from Big Tech companies as a fundamental problem in the current market.

AI Corporate Bond Market Projected to Reach $7 Trillion by 2029

Independent research firm Semi Analysis estimates the AI corporate bond market size will grow to $7 trillion by 2029.

FAQ

What amount of bonds did Amazon issue this week? Amazon issued $25 billion in corporate bonds this week, attracting approximately $62 billion in investor demand.

How does Amazon's recent bond demand compare to its March offering? The recent $25 billion offering received about $62 billion in demand (2x oversubscribed), while Amazon's March issuance of $37 billion attracted approximately $126 billion in demand (3x oversubscribed), indicating reduced investor appetite.

How much have Big Tech companies borrowed through bonds this year? According to the Kobeishi Letter, Amazon, Meta, Alphabet, and Oracle issued a combined total of $159 billion in corporate bonds from early this year through May.