A flood of foreign currency bond issuance by Big Tech groups is shaking up the world's smaller credit markets, pushing borrowing costs higher and causing local issuers to shift the timing of their deals. Silicon Valley's so-called hyperscalers, including Amazon and Alphabet, have this year started issuing debt in foreign currencies including the Swiss franc, British pound and Canadian dollar, as they tap new funding sources in the race for AI dominance.

The size of their deals has put the hyperscalers among the biggest issuers in those markets, in some cases crowding out other companies. Alphabet raised C$8.5bn earlier this year, briefly the biggest ever bond issuance in the Canadian market before Amazon issued C$14bn a few weeks later. Canada's AA corporate credit index has weakened in recent weeks, taking its spread over government bonds higher than that of the lower-quality A index.

Analysts say the hyperscalers basically come in and reprice all of the high-quality curve, resetting valuations wider for other, similarly rated companies. From zero presence until this year, Amazon and Alphabet together now make up 7.7 per cent of the entire Swiss investment-grade credit index, creating new risks for those markets and for investors obliged to track the composition of the benchmark.

While some investors welcome the vibrancy hyperscaler issuance brings to less liquid markets, others warn that longer-dated debt issuance by tech companies could crowd out other corporate issuers and widen spreads across smaller markets.