US Tech Giants' Debt Raises Credit Risk, Emerging Market Bond Premium Narrows
US tech giants are heavily borrowing for AI infrastructure financing, causing some emerging market bonds to be viewed as safer options. The yield on SK Hynix bonds maturing in 2031 is currently only 9 basis points higher than Amazon's bonds of the same maturity, narrowing to one-third of what it was a year ago. The cost of hedging their credit risk is lower than that of several US tech giants. For the first time in history, the risk premium on emerging market corporate bonds has converged with comparable benchmarks in the US.
-- Price
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