Investors demanded steep concessions in Salesforce's $25bn bond deal on Wednesday, reflecting Wall Street's growing concerns about AI disruption in the software sector. The 30-year bonds, rated A+ by S&P, were sold at a yield 1.7 percentage points above US Treasuries, significantly higher than the 0.92 percentage point spread on similar-rated bonds.

This premium borrowing cost comes as Salesforce faces mounting pressure from AI competitors like Anthropic, whose tools directly challenge the company's customer management software. The company's stock has dropped 27% this year, prompting the debt offering to fund a large share buyback. In 2021, Salesforce sold debt with just an 0.8 percentage point spread to fund its Slack acquisition.

Analysts warn Salesforce's credit profile could deteriorate to triple-B levels as the company may take on more debt for future acquisitions. Despite management's emphasis on recurring revenue from long-term contracts and upcoming AI tools like Agentforce, investors remain skeptical. The company faces fierce competition from startups like Sierra, founded by former Salesforce co-CEO Bret Taylor, which is gaining traction in enterprise software.