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AI bond flood adds to market pressure
Mint Bangalore
|November 25, 2025
their hype; even a ratings downgrade can hurt returns, let alone a default.
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Recent pressure on tech company bonds hasn't been evenly applied across the sector.
(REUTERS)
Recent pressure on tech company bonds hasn't been evenly applied across the sector. Alphabet, Amazon and Microsoft have been spared the worst, thanks to their ability to fund most of their AI expenditures with the huge amounts of cash that they generate each quarter.
Meta, another tech behemoth, has a slightly less massive cash hoard and is seen as likely needing more debt to realize Chief Executive Mark Zuckerberg’s large ambitions. When the social-media company issued $30 billion of bonds at the end of October, it had to lure investors with yields comfortably above those of its existing debt.
Prices of some of those bonds then edged lower in the secondary market, pushing the yields higher. Despite carrying double-A ratings, they now yield roughly the same as International Business Machines bonds, which are rated single-A by the major ratings firms.
This story is from the November 25, 2025 edition of Mint Bangalore.
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