BofA strategists say debt-fueled AI infrastructure financing by tech giants is
competing with sovereigns for capital and raising borrowing costs in developing
countries. Geopolitical risks, high oil prices and rising policy rates have
already pushed EM bond yields higher; since the start of H2 average EM USD
sovereign yields have risen about 100bp to their highest level since April last
year. Data show Amazon and Alphabet have issued roughly $70bn of debt in H2; EM
sovereign international issuance since July 1 has halved to $45bn from $91bn a
year earlier, while investment-grade EM issuance fell 56% to $29bn.
