(Bloomberg) -- Goldman Sachs Group Inc. and JPMorgan Chase & Co. launched products this week allowing investors to quickly cut — or ramp up — exposure to tech industry debt, as concerns mount over hyperscalers' huge future bond sales for artificial intelligence investments.
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Goldman announced on Thursday a product that allows investors to trade a basket of bonds from 18 equal-weighted US high-yield issuers, including CoreWeave Inc., Applied Digital Corp., and Cipher Digital Inc., according to people familiar and a note from Goldman's trading desk reviewed by Bloomberg.
The dealer can price inquiries from $50 million to $250 million and investors can buy the actual bonds in the basket or trade total return swaps on them, according to the note. The bonds in the basket have an average yield of 7.45% and an average spread of 319 basis points. That compares with an average yield of 7.3% and spread of 267 basis points for the broader high-yield market.
Meanwhile, JPMorgan launched three baskets on Monday, including a pool of long-dated, more liquid investment-grade bonds tied to hyperscalers and project finance issuance from 11 issuers, according to separate people familiar with the matter. That includes Microsoft Corp., Meta Platforms Inc., Amazon.com Inc., Alphabet Inc. and Oracle Corp.
Another basket targets 15 AI-related issuers in the junk market that includes CoreWeave and Applied Digital while the third portfolio focuses on 16 issuers in the semiconductor and hardware space, including Nvidia Corp., said the people, asking not to be identified as the details are private.
Representatives for Goldman and JPMorgan declined to comment.
Spending Worries
Wall Street has rushed to launch new hedging tools as bondholders' exposure to debt linked to AI and data center projects rises at an unprecedented pace.
The baskets allow hedge funds and other investors to quickly manage sector-specific risks in their portfolios or express bearish and bullish views. The trade can be executed in a single swoop at one agreed price.
Fears over AI-linked spending flared again on Thursday, as earnings season brought a fresh round of results from some of the world's biggest companies. Alphabet's bonds were under pressure after the Google parent company boosted its projected capital expenditures for the year and quarterly cash flow turned negative for the first time since it went public more than two decades ago.