Original Author: Xu Chao

Original Source: Wall Street Insights

American technology giants are extending their financing reach into the euro bond market, which has led to a large wave of bond supply that is putting new pressure on the European credit market.

Meta is planning its first issuance of euro bonds as part of its cross-border financing plan, which is set to reach at least $20 billion; Google is concurrently pushing forward with a €6 billion bond transaction and must offer investors yields significantly higher than similar transactions at the beginning of the year to secure subscriptions. The influx of supply from tech giants has intensified concerns about whether the financing costs for European corporates and even sovereign issuers will face pressure as a result.

This trend reflects the profound impact of the AI infrastructure construction wave on global capital markets. Morgan Stanley CEO Ted Pick stated that capital expenditures in the AI sector could reach $10 trillion to $15 trillion, while warning that this trend poses a risk of "crowding out demand for non-AI high-quality enterprises."

Wave of Tech Lending Floods into Europe

According to Bloomberg, citing informed sources, Meta is considering issuing cross-border dual-currency bonds, with dollar bonds maturing between 5 to 30 years, and euro bonds ranging from over 4 years to over 38 years, and has engaged Citigroup and Morgan Stanley to hold investor calls on Monday and Tuesday to assess demand. No final decision has been made on the issuance, and the final size may still be expanded based on subscription levels.

Meta previously held non-deal roadshows in Europe last month to meet with investors, laying the groundwork for its first foray into the euro bond market. This move aligns it with Google and Amazon, expanding its source of financing currency from solely dollars to multiple currencies. Oracle also raised $10 billion in the dollar bond market at a high new issuance premium to attract buyers to take on risk.

Behind the American tech firms’ intensive push into the European market is the enormous financing demand spurred by AI infrastructure construction. Meta’s bond issuance is just one part of its multifaceted financing actions—according to Bloomberg reports, the company priced $25 billion in common stock last week, raised $12.5 billion through preferred stock issuance, and plans to raise up to $60 billion through an ongoing equity issuance (ATM) program.

Supply Pressure Drives Up Yield Premiums

The supply pressure in the euro bond market is already reflected in pricing. Google’s €6 billion bond issuance must offer investors yields significantly higher than similar transactions at the beginning of the year, underscoring that the marginal costs of digesting the large-scale tech bond supply are rising.

In contrast, Meta's last entry into the high-rated bond market was in April this year, completing an issuance of $25 billion, with peak subscription demand reaching $96 billion, and the market response was enthusiastic. The starkly different subscription ecology compared to now reflects a clear shift in market sentiment.

Some European issuers have reacted to this. According to Reuters, as tech giants continue to seize bond market funding, some European corporate issuers are choosing to shift to shorter-term bonds to avoid the potential upward pressure on longer-term yields from supply shocks.

Divisions Deepen Between Wall Street and Asset Management Firms

Public divisions are emerging between Wall Street bank executives and large asset management firms regarding the sustainability of the AI debt wave.

Goldman Sachs' David Solomon believes that the AI-driven tech supercycle will dominate capital markets; despite inevitable short-term volatility, "the capital markets remain open, and investors are still focused on the growth trajectory of AI demand and computing needs." Blackstone President Jon Gray also holds a cautiously optimistic view, suggesting that the current divisive sentiment "might be healthy," but the overall trend indicates more investment and greater capital demand in AI.

Asset management firms appear distinctly more cautious. Pimco CEO Emmanuel Roman stated at the same summit, "At some point, there will be a downturn, and things will break," pointing out that potential downward catalysts could stem from rising U.S. interest rates, Middle Eastern conflicts, or even eurozone crises. According to Bloomberg sources, Pimco has previously managed to avoid losses from AI bond price declines through a series of timely reduction actions and interest rate hedges.

Franklin Templeton CEO Jenny Johnson bluntly stated that the AI investment cycle may have stretched too far, "we are at the stage of 'are we going too far'"—she especially pointed out that super-large tech platforms are rapidly shifting from a capital-light model to considerable capital investment, which is the core structural risk at present.

Uncertain Return Prospects, Market Sentiment Cooling

The tech giants' reckless borrowing gamble, coupled with the high uncertainty of AI investment returns, is causing a noticeable fracture in market sentiment. The cost of default protection for debts of several U.S. tech firms has surged to new historical highs, and some AI-related stocks have also faced significant pullbacks.

Bain Capital Chairman John Connaughton pointed out that "bubbles do burst," and that current valuations in the AI sector are quite elevated, with the core issue being whether corresponding returns can be realized. Oaktree Capital Management Co-Chairman Howard Marks recently stated that AI is showing "signs of emerging skepticism," categorizing it as one of the current "crowded trades."

Pimco’s experience holds certain reference significance. The firm previously participated in the AI debt market with billions of dollars in 2025, fueling the bond boom, but subsequently pulled out in time through a series of reduction operations to extract profits before bond prices fell and the market faced a massive supply shock.

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