(Oct 8): Sovereign borrowers are no longer the big boys on the block as AI giants increasingly invade their turf. The Wall Street Journal reports Broadcom is ​lining up $50 billion of financing to buy gear from OpenAI, with Oracle also seeking an unspecified ‌sum.

Sources say SpaceX alone is looking to issue $30 billion in investment-grade debt, along with a cool $10 billion in bank loans, to buy chips from Nvidia.

This is the same SpaceX that raised a record $86 billion in its June IPO and then immediately sold $25 billion in bonds. Nvidia also ​happens to hold a stake worth around $21 billion in the Elon Musk venture.

Some analysts saw this as ​a wise move by Musk as it could help SpaceX steal a march in the AI ⁠arms race, which is all about who gets to scale first. Using debt also means not having to go ​back to the equity market and diluting stock.

Others worried about the circular nature of all this business, with the chipmakers ​helping fund the buyers of their own products. Investors also seemed to have qualms about turning equity risk into credit risk, as SpaceX's five-year CDS spread widened almost 15 basis points to a record.

That hyperscalers are bold enough to raise such momentous sums should be ​music to the ears of companies that make all this data-centre gear. Samsung today projected a nearly nine-fold increase in operating ​profit to $80 billion, though its shares still slipped 1.3%.

Whatever the business merits, all this corporate borrowing is a real headache for governments ‌that ⁠need to fund persistent budget deficits and increased defence spending in a more uncertain world. All as ageing populations demand more healthcare and pension payments, while shrinking the tax base.

Problems France knows all too well. It's never a good sign when your central bank governor has to reassure investors the country does not need help from that big bank in Frankfurt.

The prospect ​of increasing competition from corporate ​borrowers saw yields on 10-year ⁠Treasuries edge back up to 5.31% in Asia. Yields had fallen from a top of 5.3645% overnight when the latest note auction drew so much demand the Street was left ​holding hardly any of the paper.

Now, it's time for the 30-year to step into ​the limelight and ⁠see if yields around 5.70% can draw the same sort of bids.

Uploaded by Siow Chen Ming