Tech Debt Boom Ripples Through Credit Markets, Pushing Up Swaps Spreads for Unrelated Firms
Heavy bond issuance by U.S. technology companies is rippling through credit markets and appears to be unexpectedly pushing up risk measures for some of the world’s safest companies. Strategies at BNP Paribas said the moves are a spillover effect of intensifying competition for funds in the high-grade market. Large technology companies are raising tens of billions of dollars, and that competition for capital is even driving up credit-default swap costs for companies unrelated to data centers or artificial intelligence. BNP Paribas did not disclose the specific companies covered by its analysis. Data showed, however, that swap spreads for luxury-goods giant LVMH, drugmaker Sanofi and defense company BAE Systems Plc, among others, have each risen by more than 10% since the end of last year, according to Bloomberg.
Strategies at BNP Paribas said the moves are a spillover effect of intensifying competition for funds in the high-grade market. Large technology companies are raising tens of billions of dollars, and that competition for capital is even driving up credit-default swap costs for companies unrelated to data centers or artificial intelligence.
BNP Paribas did not disclose the specific companies covered by its analysis. Data showed, however, that swap spreads for luxury-goods giant LVMH, drugmaker Sanofi and defense company BAE Systems Plc, among others, have each risen by more than 10% since the end of last year, according to Bloomberg.