⚠️ DEBT MARKET STARTS SENDING WARNING SIGNS OF AN AI-DRIVEN “FEVER”
Apollo says insurance costs for bonds of hyperscalers such as Amazon, Alphabet, Meta, and Microsoft are rising.
Last October, the market assessed the risk level of hyperscalers and banks as nearly equivalent. Now, the insurance cost for hyperscalers is about 0.6% higher than for banks.
Put simply, if investors insure a $10 million bond issued by a hyperscaler, they currently have to pay around $60K more per year than insuring the same amount of bank bonds.
This does not mean that large tech companies are about to go bankrupt. But the market is beginning to worry that they are borrowing too much money to build data centers, buy chips, and develop AI—while it’s still unclear whether these massive investments will generate commensurate returns.
$SYN
$AVA
Apollo says insurance costs for bonds of hyperscalers such as Amazon, Alphabet, Meta, and Microsoft are rising.
Last October, the market assessed the risk level of hyperscalers and banks as nearly equivalent. Now, the insurance cost for hyperscalers is about 0.6% higher than for banks.
Put simply, if investors insure a $10 million bond issued by a hyperscaler, they currently have to pay around $60K more per year than insuring the same amount of bank bonds.
This does not mean that large tech companies are about to go bankrupt. But the market is beginning to worry that they are borrowing too much money to build data centers, buy chips, and develop AI—while it’s still unclear whether these massive investments will generate commensurate returns.
$SYN
$AVA
