Michael Cembalest, Chairman of JPMorgan Asset Management, estimates that by 2026, the five hyperscale cloud vendors and Nvidia will have issued approximately $320 billion in debt, including SPV financing whereby these companies assume support obligations for data center leasing. The long-term portion, after conversion, is approximately $303 billion equivalent to 10-year US Treasury bonds, representing 68% of the US Treasury's net long-term financing during the same period.
The core impact is that high-rated tech bonds are beginning to compete with US Treasuries for long-term funding. JPMorgan data shows that hyperscale cloud vendor bond spreads have widened by about 30 basis points this year, while the dollar investment-grade bond index has only widened by 2 basis points. Reuters statistics show that the subscription multiple for related new bonds has fallen from nearly 5 times in February to less than 2 times in July.
