AI's borrowing bill is rising as bond buyers demand more (opens the source in a new tab)
- The FT's editorial board notes that Alphabet, Meta and Oracle went back to bond markets this week but had to pay clearly more than a few months ago; Oracle's new bonds carry coupons above 8.5%.
- Insuring against default is dearer too: protection on Meta's debt now costs about 1.2% a year, which the board likens to junk-rated South Africa.
- Its view: the AI boom may not end with a stock crash but with a slow squeeze in credit. Oracle has even pledged to cap the new money it raises from markets until 2030.
- 1.2%
- yearly cost to insure Meta's debt
Why it matters Dearer money raises the return every data centre has to earn. If cash-rich, top-rated giants pay more, smaller AI borrowers and the lenders behind them face a much harder test.
Other side These firms still hold strong ratings and cash-rich core businesses, and they are still raising huge sums. Repricing risk is credit markets working, not breaking.