AI giants issue hundreds of billions in bonds, squeezing European lenders

European businesses and governments face stiffer competition for capital as US technology firms accelerate their debt issuance to fund artificial intelligence infrastructure. The influx of corporate borrowing is straining a bond market that already supports high levels of public debt.

Amazon, Alphabet, Meta, and Oracle have sold approximately $250 billion in dollar-denominated bonds since the beginning of 2025, according to data compiled by AI Industry Reviews from US regulatory filings. These four companies also issued €37 billion in euro-denominated debt. Microsoft joined the effort recently with a $25 billion bond sale priced entirely in dollars.

Forecasts suggest this trend will accelerate. Goldman Sachs projects $420 billion in new bond issuance by AI hyperscalers next year. ING estimates that euro-denominated sales from these firms will reach about €60 billion. This volume places additional pressure on a market where sovereign yields have already climbed sharply in recent months.

In France, where public debt equals 119% of gross domestic product and the deficit remains above 5%, the 10-year bond yield has jumped from roughly 3.7% to nearly 5% over the last six months. The country’s annual interest payments are expected to rise from €79 billion to €91 billion next year, potentially exceeding €100 billion in 2028.

Viktor Hjort, global head of credit strategy at BNP Paribas, characterized the current environment as one of bond abundance. He noted that hyperscalers now hold a substantial presence in the euro market, allowing them to compete directly with governments and other companies for investor funds. Hjort observed that yields rose again in October due to energy price increases linked to the Iran conflict and a political crisis in France.

The cost of debt is already affecting corporate performance. Goldman Sachs reported last week that interest expenses as a share of sales for companies in the Stoxx 600 index increased by nearly half since 2022. This shift has reduced earnings by more than 5%. Analysts warn that further competition from AI borrowers may force firms to cut spending on plants, equipment, and research to prioritize debt repayment.

Municipal borrowers are also impacted. An OECD study published in January found that regional borrowing costs tend to rise in areas where AI adoption is growing fastest, measured by the share of AI-related job vacancies. Christos Makridis, co-author of the study from Arizona State University, told Deutsche Welle that this pattern in Europe contrasts with his research in the US, where AI investment correlated with lower municipal borrowing costs.