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Global corporate bond markets reshaped by AI debt sales

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  • Big Tech bond offerings from Europe to Japan and Switzerland show smaller markets, traditionally dwarfed by the U.S., can flex their muscles in the $40 trillion corporate debt sector.

Google-parent Alphabet (GOOGL.O) is already one of the largest outstanding borrowers in the sterling and Swiss franc corporate bond markets, while Amazon (AMZN.O) raised 14.5 billion euros ($16.88 billion) in March from an eight-part deal, the biggest ever in the euro corporate bond market, LSEG said.

The debt issuance by so-called “hyperscalers”, or Big Tech, outside the United States is part of a campaign to diversify funding early as they plan to finance trillions of dollars of investment in AI infrastructure, mainly data centres, in the years ahead, bankers say.

Companies can also hedge their currency risk on global assets by issuing debt in foreign currencies, benefiting from relatively cheaper borrowing costs in regions like Europe.

Alphabet broke records across markets, with its yen, Canadian dollar, Swiss franc and sterling deals all breaking borrowing marks in respective currencies.”If you fast forward 12 months looking at the pace of investment of these companies, some of these companies are going to be already among the biggest issuers globally in any currency,” said Giulio Baratta, co-head of investment-grade finance at BNP Paribas.

Meanwhile, Alphabet and Amazon have helped increase borrowing by non-financial U.S. corporations in Europe to above 60 billion euros ($69.85 billion) this year, another record.

DEBT SALES RECORD

Morgan Stanley forecasts euro debt issuance from the hyperscalers to hit roughly 50 billion euros in borrowing this year, a move that could help the U.S. edge past France as the largest provider of overall corporate debt in the euro zone.”A lot of these markets, including euro, have evolved and now provide a lot more depth and opportunity for larger capital raising than was historically the case,” said John Servidea, global co-head of investment grade finance at JPMorgan, which guided recent offers for the two hyperscalers.

Hyperscalers sold a record amount of international non-financial corporate bonds this year in markets such as the Swiss franc and yen, LSEG tracked.

The capacity for U.S. companies beyond the hyperscalers to raise considerable amounts of money in such markets has not gone overlooked, Servidea added.“They’re definitely looking at other markets more seriously than they would have done before.”

On a broader basis, currencies such as the Australian dollar and Hong Kong dollar have also seen an increase in borrowing as global corporations diversify their funding sources.

Meanwhile, amid international tensions and policy uncertainty, investors are turning to diversification away from the U.S. currency.

BUILDING UP EXPOSURE TO AI

Hyperscalers’ non-dollar issuance has doubled to 30% of their total bond funding this year, Bank of America said.

“It means that Big Tech can go longer periods between taps of the U.S. market and borrow at rates that are in some cases cheaper than the U.S. dollar market, or at least similar,” Servidea said in an email.

Heavy borrowing can weigh heavily on a borrower’s bonds, and experts see indicators of hyperscalers underperforming the U.S. corporate bond market. If you visit it less often, that can assist to lessen the hit.

BNP Paribas, which also arranged ​deals for Alphabet and Amazon, said the companies were mainly holding the cash in the currency they are raising rather than converting ​them back to dollars.

As for investors, they are seeking to gain exposure to the AI theme in the international bond markets where technology brands had a limited presence before.

Nicolas Forest, chief investment officer at Candriam, is one example who is buying into the euro offers from hyperscalers to increase exposure to the IT industry in the European bond market.

By the end of April, one round of issuance had seen Alphabet replace the UK’s Prudential as the fourth-largest borrower in ⁠ICE BofA’s pound corporate bond index and the sixth-largest in Swiss francs.

As tech issuance increases, corporate bond markets outside the U.S. will be more exposed to tech trends, for better or worse.“If there are problems with (AI), it will probably create more volatility,” said David Zahn, head of European fixed income at Franklin Templeton.

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Pakistan begins issuing e-passports at diplomatic missions worldwide

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Director General Immigration and Passports said that Pakistan has started issuing electronic passports (e-passports) at Pakistani diplomatic missions across the world, a major milestone achieved under the vision of the prime minister and orders of Interior Minister Mohsin Naqvi.

This launch was accomplished due to the ongoing effort of the team of Directorate General of Immigration and Passports.

The e-passport is equipped with state-of-the-art security measures and constructed according to international standards and is a step forward in modernising the passport services in Pakistan.

The director general said machine-readable passports currently issued would stay valid until their expiry dates, and e-passports would be issued to anyone applying for new passports.

The effort has been termed as a key step in modernising Pakistan’s passport services in line with the vision of “One Nation, One Passport, One Identity”.

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Interior Minister Naqvi warns against online fraud, cybercrime and blackmail

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Interior Minister Mohsin Naqvi has warned the residents about the increasing hazards of online fraud, cybercrime and blackmail and advised them not to post personal images and videos with unconnected persons.

New types of online fraud were coming to light, including situations where women and girls were coaxed into revealing their images and videos and later blackmailed, Naqvi said during a press briefing on cyber crime in the province capital.

He warned people, especially women, to be very careful about sharing personal images, as some people use pictures and films to blackmail. He made a special appeal to moms and sisters to keep their private images private.

The interior ministry also warned individuals not to transfer money online without verification, even if someone claimed to be sick and asked for financial help online, to avoid falling victim to online financial scam. He called on people to check the names of those who asked for money and to beware of bogus accounts.

Fraudsters impersonated residents on social media with bogus identities, Naqvi added. He said the cyber police are being mobilised to check cybercrime and measures are being taken to provide assistance to the victims in time.

He said he will start a public awareness campaign to educate individuals about online fraud, phoney identities and extortion. He also committed his complete support to the National Cyber Crime Investigation Agency (NCCIA).

The interior minister stated the NCCIA was getting the largest number of instances of harassment of girls. He said he encountered three girls who tried to commit suicide.

“It is important to prevent online harassment and blackmail, protect victims and provide timely assistance,” Naqvi said when talking about the occurrences.

He appealed to residents to be careful when using the internet and social media and to avoid unnecessarily sharing personal information and images and to report the proper authorities if they came across any suspicious online behaviour.

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German defence ministry accords guard of honour to President Zardari

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A magnificent celebration was hosted in honour of President Asif Ali Zardari at the Ministry of Defence in Germany. Additionally, a guard of honour was presented to him at this event.

Upon President Zardari’s arrival at the German Ministry of Defence, German President Frank-Walter Steinmeier extended a warm welcome to him. The ceremony included the playing of the national anthems of both countries, as well as the presentation of a guard of honour to the president of Pakistan.

In response to President Steinmeier’s invitation, President Zardari is currently taking a trip to Germany. Due to the fact that this is the first time in almost 23 years that a Pakistani head of state has travelled to Germany, the visit is of great significance.

During this year, Pakistan and Germany are also commemorating the 75th anniversary of the foundation of their diplomatic relations with one another.

During the course of his tour, President Zardari will meet with his German counterpart as well as senior officials from the German government. He will also be accompanied by a high-level team.

The topics that will be discussed include bilateral ties, events in the area and the world as a whole, and strategies to improve economic and trade cooperation between the two countries.

Pakistan and Germany are expected to deepen their collaboration in a variety of fields as a result of President Zardari’s visit, which is likely to add new momentum to the bilateral relations between the two countries.

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