BondCliQ CEO: AI Debt Wave May Lift US Government Borrowing Costs

BondCliQ chief executive Chris White told CNBC's Fast Money that many recently issued hyperscaler bonds start trading at wider spreads within six months of their sale. He believes the glut of debt tied to artificial intelligence may also be lifting the cost of US government borrowing.

White's firm, BondCliQ, supplies pricing data for corporate bonds, and he does not anticipate any major default risk. Still, he expects lenders to demand higher returns from hyperscalers, the technology giants building AI data centers.

Why New AI Bonds Lose Ground So Quickly

On CNBC, White said fixed-income investors respond over weeks and months, whereas stock traders move from day to day. He pointed to CoreWeave, an AI cloud computing provider, and Oracle as examples of companies whose long-term stories bond buyers question.

Apollo Global's chief economist, Torsten Slok, has separately linked higher default-insurance costs on hyperscaler debt to a weakening in credit fundamentals.

A wider spread indicates that investors are seeking more yield relative to safer benchmarks. White described that pattern as unusual for large institutional investors.

As a result, he expects those buyers to factor in that track record when hyperscalers next approach the debt market.

“investors will not be fooled twice.”

BondCliQ CEO Chris White made the remark on CNBC.

According to White, CoreWeave accounts for about 5% of the $258 billion in AI-linked debt sold over the past year. A refinancing will be required within five to seven years, so the business remains sensitive to higher short-term rates.

Oracle, in contrast, has borrowings that stretch out for decades, which reduces the refinancing pressure from rising rates.

Could the AI Debt Wave Lift Borrowing Costs for Everyone?

According to White, Microsoft is the sole hyperscaler with a top AAA credit rating. That makes the pricing of its bonds the reference point for the rest of the group. He added that rivals would be expected to match if Microsoft offered more generous terms.

White drew a line from the surplus of new debt to US Treasuries, mentioning concerns at the White House about long-term yields and programs designed to buy bonds directly. White described that link as his own view.

Equities also stand to be affected, because Ray Dalio has cautioned that the buffer around stocks is thinning as yields rise.

In White's view, lenders will demand higher returns across the board, from businesses to the US government. If that forecast is correct, the cost of financing AI could influence credit pricing far outside technology.