Goldman Sachs is underweight hyperscalers on debt supply surge

Reports coming in for today mention that Goldman Sachs Group Inc.’s Lindsay Rosner says the bank’s asset management arm is underweight on the biggest artificial intelligence borrowers as a flood of issuance washes over the market.

“We believe there will be a lot of hyperscaler issuance,” Rosner, head of multi-sector set income investing at Goldman Sachs Asset Management, stated in a Thursday interview on Bloomberg TV. “For that sector at large we are underweight knowing more issuance will come.”

Big Tech firms have been among the biggest sellers of high-grade corporate bonds in the US this year, with firms including Amazon.com Inc., Meta Platforms Inc. and Alphabet Inc. borrowing hundreds of billions of dollars for artificial intelligence projects.

“That is what we have noted all year long,” Rosner stated. “New issuance is replacing existing issuance.”

Hyperscalers have accumulated almost $3 trillion in off-balance sheet obligations, an important consideration in evaluating their creditworthiness, according to Moody’s Ratings.

Rosner stated the underweight call reflects its expectations for heavy supply, rather than an expression of pessimism around AI. Her team believes “in the story of AI,” she stated, but is “cognizant” that more borrowing could reprice the market.