This may now be one of the best periods to buy US corporate bonds
Bonds of reliable giants are currently offering yields from 6% to 6.5% per annum
The yield of the VettaFi AI Hyperscaler Bond Index, which tracks bonds of the largest technology companies, stood at 6.51% at the end of September. The index includes bonds from Microsoft, Alphabet, Oracle, Amazon, and Meta, which are actively borrowing funds for artificial intelligence projects.
Stephen Purdy, Managing Director at TCW, believes that investors rarely get the opportunity to purchase bonds of AA-rated companies with comparable quality at such yields. Even the cash flows of the most financially secure corporations are under pressure, and Meta's free cash flow has turned negative.
According to JPMorgan estimates, more than $4 trillion in debt linked to artificial intelligence could be issued by 2030. Companies are likely to combine bond issuance with equity, operating cash flow, and strategic partnerships. Investors are advised to select bonds selectively and consider the concentration of risks in the technology sector.
