Record-high bond issuance! This year, major US cloud companies have issued bonds at four times the average of the past five years, with bond spreads widening significantly.

Record-high bond issuance! This year, major US cloud companies have issued bonds at four times the average of the past five years, with bond spreads widening significantly.

Bank of America’s latest report reveals an unprecedented debt issuance spree by major U.S. tech giants, and the impact this has had on the credit bond market.

According to Chase Wind Trading Desk, Bank of America points out in its latest report that the five largest U.S. cloud computing giants (Amazon, Google, Meta, Microsoft, Oracle) have issued a staggering total of $121 billion so far this year, more than four times the average of $28 billion over the past five years.

This flood of bond supply has significantly impacted the market, with bond spreads for the cloud giants widening sharply. Oracle’s spread has widened by 48 basis points, Meta and Google by 15 and 10 basis points respectively, noticeably underperforming the overall investment grade bond index.

Meanwhile, Bank of America believes that in 2026 the expected supply will remain around $100 billion, without further acceleration. The market has already absorbed the shock of peak supply, and with expectations for a more stable issuance rhythm, the currently elevated yields may offer investors a rare entry opportunity.

Spreads Widen Sharply, Major Underperformance

Since September, the five major cloud computing giants have issued a cumulative $81 billion in U.S. investment grade bonds. Adding sporadic early-year issuances and the $27 billion RPLDCI transaction in October, the total bond issuance for 2025 to date has reached $121 billion. By contrast, the average annual issuance by these companies over the past five years was only $28 billion.

The massive supply has directly hit the secondary market, causing the spreads of these tech giants’ bonds to widen dramatically, far underperforming the market average. The Bank of America report shows:

This supply flood unsurprisingly pushed spreads of the mega-scale cloud vendors sharply higher. From September 1 to November 14, Oracle (ORCL) saw its spread widen by 48 basis points, with Meta (META) and Google (GOOGL) widening by 15 and 10 basis points, respectively. This equates to a 27-49% increase, clearly lagging the overall investment grade index which rose only 3% in the same period.

High-Issuance May Become the Norm, Are Spreads Attractive?

Looking ahead, the bond issuance wave seems far from over. According to consensus forecasts for 2026, the financing needs of different cloud giants vary significantly. Meta and Oracle’s capital expenditures are expected to exceed available cash after subtracting dividends and share buybacks from operating cash flow, while Google’s capital expenditures will roughly match the available cash flow.

So far, four of the five cloud giants have issued U.S. investment-grade bonds since September, with only Microsoft yet to act. Relative to its capital expenditure scale, Microsoft’s financing need is the smallest, explaining why it has not yet entered the market.

Bank of America’s report expects that due to sustained capital expenditure demands, the bond issuance in 2026 will remain at the hundred-billion-dollar level. But BofA strategists believe this may present an opportunity:

Given that these companies can still cover most of their capital expenditures with operating cash flow in 2026, we expect supply of a similar scale, around $100 billion, in 2026. The bond issuance pace of mega cloud vendors will not accelerate further, making the currently wide spreads more attractive.

 

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The above content is from Chase Wind Trading Desk.

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