According to Yuri Seliger and Sohyun Marie Lee, credit strategists at Bank of America, in a note published on 17 November, the total of hyperscalers’ supply year-to-date is US$121 billion. Issuance is set to stay at these levels in 2026, making currently richer spreads attractive, according to the analysts.
The issuance of US$121bn of paper, compared to US$28bn in 2024, particularly since early September, has led to materially wider spreads.
Amazon, Google and Microsoft can finance their capital expenditures (capex) from operating cash flows and have seen the least impact, with Microsoft the only hyperscaler not to have turned to primary markets for liquidity. According to BofA analysis, Amazon, Microsoft and Alphabet’s spreads have widened by less than ten basis points.
On the other hand, Meta and, in particular, Oracle will need to come back to the markets to fund their planned capex. Meta’s spreads have widened fifteen basis points since 1 September and Oracle’s 48 basis points.
While Meta’s operating cash flows are superior to expected and ever-growing capex forecasts when dividends and share buybacks are not taken into account, Oracle’s expected capex in 2026 will be at least 40% over operating cash flows.
The BofA analysts point out that, under current capex and operating cash flow forecasts, the level of issuance by hyperscalers should stay similar to this year.
They say: “No significant acceleration in hyperscaler issuance makes their currently much wider spreads attractive.”
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