The global artificial intelligence boom has not only ignited stock markets but is also fundamentally reshaping the landscape of the worldwide bond market through massive financing demands. Pacific Investment Management Co (Pimco), a leading global asset manager, has recently issued a warning that tech behemoths are entering the debt market at an unprecedented pace to cover the enormous capital expenditures required for AI data centers and related infrastructure. This flood of "too much, too fast" debt supply has already created visible signs of market indigestion.

So far this year, top-tier US tech companies with exceptional credit ratings, such as Amazon (NASDAQ: AMZN) and Google's parent Alphabet (NASDAQ: GOOG), have collectively issued hundreds of billions of dollars in bonds. Marc Seidner, Chief Investment Officer of Non-Traditional Strategies at Pimco, noted in a recent discussion that this massive bond supply has produced a clear "crowding-out effect," forcing corporate debt to compete for capital with government bonds as nations strive to repair their fiscal deficits. Seidner suggested that the recent spike in 10-year Treasury yields, which climbed to around 4.75% earlier this month and touched multi-year range highs, may have been significantly influenced by this wave of AI-driven bond issuance.

According to statistics, global corporate bond financing for data center and AI infrastructure purposes has already surpassed $410 billion this year alone. In this capital race, SoftBank Group stands out as one of the most aggressive participants. Sources indicate that the company, led by Masayoshi Son, is currently seeking a new $10 billion loan to refinance the substantial debt incurred from its investment in OpenAI. SoftBank's financing approach highlights the highly leveraged nature of AI investment. The company plans to inject nearly $65 billion into OpenAI by October this year. To support this goal, SoftBank is pursuing multiple funding avenues: beyond the aforementioned $10 billion two-year loan, it is considering issuing up to $20 billion in bonds and launching a record ¥1 trillion (approximately $6.3 billion) retail bond offering to individual investors in Japan.

Despite lingering concerns over credit risk in the AI sector, SoftBank continues to raise capital relentlessly, including by pledging OpenAI equity, to repay a $40 billion bridge loan. Although the debt expansion has heightened market volatility, Pimco experts believe this environment actually creates an attractive entry point for fixed-income investors. Pramol Dhawan, Head of Emerging Markets Portfolio Management at Pimco, pointed out that the AI construction cycle is transcending national borders and translating into tangible economic growth momentum. He cited South Korea's robust growth driven by the AI supply chain as an example. This productivity enhancement will eventually be reflected in a natural rise in yields, thereby providing support for the bond market.

In their latest research report, Seidner and Dhawan jointly concluded that current bond yields offer a "compelling entry point." Especially against a backdrop of uncertain macroeconomic prospects, given the recent disappointing non-farm payroll data and weak consumer confidence, investors can hedge against future volatility by allocating to current high-yield bonds. Seidner further analyzed that the economy is exhibiting a "K-shaped" trajectory, with concerning debt pressures among lower-tier consumers. In this context, bond investors should not react emotionally to elevated yield levels. Instead, because of AI infrastructure's long-term contribution to global growth, the current yield environment allows long-term capital to lock in stable returns for years to come.