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 issuan

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.