Capturing Generational Yields in AA Hyperscalers

Posted on July 9, 2026

Before the launch of ChatGPT in 2022, the mega cap technology hyperscalers – Amazon, Alphabet (“Google”), Meta, Microsoft, and Oracle – were infrequent issuers of corporate debt in the investment grade (“IG”) market. Supported by pristine balance sheets and massive free cash flow generation, these companies had little structural need for debt.

From the onset of the COVID-19 Pandemic in 2020 through 2022, their collective investment grade bond issuance averaged a modest $28 billion dollars per year. However, by the end of 2025, these same hyperscalers issued a record breaking $121 billion in corporate bonds. This surge is particularly notable given the macroeconomic backdrop. While pandemic era issuance occurred near zero, yields in recent years hovered at a sixteen year high of 5.5% following an aggressive tightening campaign by the Fed under former chair Jerome Powell. Consequently, investors can now acquire debt from the world’s largest, best capitalized companies at highly attractive yields.

To contextualize this shift, consider the capital market dynamics of 2020: When the Federal Reserve cut interest rates to zero at an emergency meeting, corporate issuance shattered records as companies rushed to secure liquidity. Although the hyperscalers did not require capital to survive, they did opportunistically capitalize on historically low borrowing costs.

When I was trading credit back at Cantor Fitzgerald, I clearly remember Alphabet, known formerly as Google, broke records by executing a $10 billion dollar deal that featured one of the lowest borrowing costs in corporate history: locking in a $1 Billion dollar five-year tranche with a coupon of 0.45% and an all-in yield of 0.47%. In contrast, during February of 2026, Alphabet issued a $20 billion dollar bond deal to fund its ongoing artificial intelligence ambitions, issuing a $3 billion dollar five-year tranche at 4.10% coupon and a 4.13% yield to maturity. This approximate 3.65% differential underscores how profound inflation, rising interest rates, and over supply have structurally reshaped funding markets for the largest companies and investors.

We anticipate this elevated issuance trend will persist through 2026 and 2027, driven by a fundamental structural pivot. These businesses are transitioning from asset light models to capital intensive operations, shifting their capital allocation focus from stock buybacks to multibillion dollar debt arrangements to fund their AI infrastructure build out. To illustrate, hyperscaler capital expenditure reached $400 billion dollars in 2025, is projected to grow over 80% to $765 billion dollars and is expected to eclipse $1 trillion dollars by 2027.

Importantly, because the majority of these hyperscalers maintain robust free cash flow, this expanded supply is being well absorbed by the credit markets, with issuance likely moderating in the medium term. Even with elevated debt loads, net leverage for these companies remains low. As a result, credit spreads have remained remarkably tight. High all-in yields continue to drive positive capital flows into the asset class, enabling investors to lock in near equity like returns within high quality investment grade debt.

At Florida Trust, we view this aggressive infrastructure buildout as a rare opportunity for fixed income investors to allocate capital directly into double A (AA) rated hyperscalers at generational yields from 4.5 to 6%. While continuous tapping of the bond and equity market may cause some technical dilution, our institutional approach to credit focuses on securing safe, long term returns rather than taking on unnecessary risk to chase yield.

If you are interested in more information on Florida Trust Wealth Management’s investment philosophy, please contact us at floridatrust.com.

Miles Toth
VP, Portfolio Management