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The US AI borrowing boom is reshaping Switzerland’s traditionally conservative bond market, as technology giants pour billions of francs of debt into the country.
The influx is beginning to affect domestic borrowers, with some Swiss companies shifting the timing or size of bond sales to avoid competing with huge US technology deals for investor demand, analysts say.
AI-related companies have accounted for 26.4 per cent of Swiss franc corporate bond issuance so far this year, according to new research from Zurich Insurance — the highest proportion of any major credit market.
Arthur Jurus, chief economist and head of the investment office at European financial group Oddo BHF, said hyperscaler issuance marked “a structural change of scale” in the Swiss market.
The shift is part of a broader transformation of global credit markets as the vast cost of building AI infrastructure pushes US technology companies to seek funding beyond the dollar market. Hyperscalers have increasingly borrowed in euros, sterling, Canadian and Australian dollars and yen as they tap new pools of investors.
Zurich estimates that Alphabet, Amazon, Microsoft, Meta and Oracle will collectively spend about $5.5tn between 2025 and 2030.
The impact has been particularly striking in Switzerland because of the small size of its market. Alphabet raised about SFr3bn in February and Amazon SFr2.82bn in May, meaning each deal was equivalent to close to 2 per cent of the existing corporate market. The transactions were more than 10 times the size of a typical bond issue on the SIX Swiss Exchange, according to Jurus at Oddo BHF.
Jurus said the Swiss market had traditionally been dominated by relatively small bond issues of between SFr200mn ($250mn) and SFr250mn, bought and held by pension funds and insurers, but was now absorbing deals “on a par with the euro market”.
“AI issuers aren’t creating the demand, they’re revealing it,” he said.
Nonetheless, their arrival has altered the rhythm of the market. Swiss treasurers are increasingly avoiding periods when hyperscalers are marketing large deals, shifting issuance windows or trimming the size of transactions rather than risk paying more to compete for investors, according to Jurus.
“Swiss treasurers now know to avoid weeks when a hyperscaler is working the order book,” he said.
Amazon’s SFr2.82bn bond sale, for example, absorbed enough investor demand to prompt some Swiss companies to shift or scale back their own bond issues to avoid having to pay higher rates.
Puneet Sharma, head of market strategies at Zurich Insurance, said the arrival of the hyperscalers was broadly positive for the Swiss market.
“They’re very strong issuers. They have massive cash flows. They’re diversified. They’ve got great ratings,” he said. “It will increase the depth of the market.”
But Sharma warned that the sheer volume of issuance could become a constraint. “The thing I would worry a little bit about is the concentration limits, especially in very small markets,” he said.
Sharma said the sheer size of the deals could eventually become a constraint. Bond investors typically set limits on how much they can hold in any single company. As hyperscalers issue more debt and become a bigger part of bond indices, some investors could hit those limits and become reluctant to buy more, forcing the companies to offer higher yields.
There is also a concern that an increasing share of the Swiss bond market becomes tied to a handful of technology companies whose fortunes depend on the same vast AI investment boom.
Stefan Gerlach, chief economist at private bank EFG, said the influx could put pressure on other borrowers, who were likely to face higher borrowing costs rather than being pushed out of the market altogether.
“Any crowding-out effect would likely operate mainly through prices: other borrowers might need to offer somewhat higher yields,” he said.
This could continue as more US technology companies enter the market, he added.
“Success breeds success. Alphabet and Amazon have demonstrated that the Swiss market can absorb very large issues,” Gerlach said.
Bjørn Sibbern, chief executive of the exchange operator SIX, said the arrival of some of the world’s biggest companies showed how far the Swiss franc market had developed as an international source of funding.
Despite the increasingly large deals, he said the market remained “well diversified across issuers and sectors”, allowing it to absorb international borrowers without losing its role as a funding source for Swiss companies.
