Big Tech is reshaping the bond market. Are investors ready for Silicon Valley’s mega issuances?

Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team, discusses a tectonic shift in Silicon Valley’s funding strategy. Once cash-rich with pristine balance sheets, major tech companies are now tapping the investment-grade bond market to finance their soaring AI-related capital expenditures.

• Silicon Valley's debt strategy shift, including $75bn in recent issuances, shows tech giants are prioritizing debt over equity due to tight spreads and tax advantages.
• Multi-tranche deals across maturities, from 5 to 50 years, are catering to robust demand from insurance and pension funds seeking durable and high-rated bonds.
• For investors, the short-term market impact may feel bumpy with wider spreads, but this creates valuable opportunities to grab highly rated mega-cap bonds at more attractive valuations.