The AI-debt deluge is getting so extreme in major credit markets that a global borrower is turning to far-flung New Zealand to try to escape it, in its first overseas issuance there in almost a decade.
The Export-Import Bank of Korea sold NZ$625 million ($372 million) of five-year notes on Tuesday, according to an email from Australia & New Zealand Banking Group, one of the banks leading the sale. It was its first sale in New Zealand’s so-called Kauri bond market for overseas issuers in about nine years and the largest by a Korean entity, according to data compiled by Bloomberg.
“With the increasing issuance of AI-related hyperscalers, issuance costs for issuers are rising,” said Sungho Park, a director in Kexim’s treasury department. “This was an attempt to overcome this challenge through currency diversification, such as by tapping into new markets where the impact is minimal.”
With Big Tech selling hundreds of billions of debt across the globe, and expectations for more to fund huge capital spending over a multi-year period, issuers in other sectors are looking for funding options to limit the impact of the outsized AI deals on their borrowing costs. That includes issuing in less active bond markets, where there is little tech-related debt. At about NZ$18.5 billion in offerings in New Zealand’s bond market in 2026, based on Bloomberg-compiled data, that total isn’t even as big as some of the one-time fundraising deals by US hyperscalers such as Alphabet Inc. in their home market.
There are also concerns about how markets will digest future AI debt funding. Part of the worry is that Big Tech will siphon away investor funds from fiscally-challenged sovereigns and push up benchmark government yields over which much of the world’s company debt is priced.
“Issuers appear to be diversifying into alternative markets as primary markets in the US and Europe become increasingly crowded by AI-related supply,” said Hyeongmin Ha, an analyst at Hana Securities for global credit.
In the US, yields on the 30-year government bond touched a near two-decade high last week before the Treasury stepped in by boosting planned buybacks.
“It was also to match investors’ appetite in pursuing other currency options in de-dollarization” moves, according to Kexim’s Park.
Kexim, which initially announced a minimum of NZ$250 million issuance, upsized the deal during the sale process. The policy bank is rated at AA by S&P Global Ratings, with an equivalent credit score from Moody’s. It has tapped debt investors in the US dollar, euro, Australian dollar, Hong Kong dollar, and British pound among others also this year.
This article was provided by Bloomberg News.