Alphabet and Amazon Bonds Account for a Quarter of Swiss Franc Corporate Issuance This Year

Bonds from companies including Alphabet and Amazon have made up more than a quarter of Swiss franc corporate issuance this year, the Financial Times reported, as American technology groups turn to a market that historically funded Swiss industrial companies, cantonal borrowers and European utilities.

The reason is arithmetic. Swiss policy rates are among the lowest in the developed world, so franc-denominated borrowing is cheap even after the cost of swapping proceeds back into dollars. The consequence is that the AI capital expenditure cycle, which for two years was funded mostly by internal cash flow, is now being financed by external creditors in several currencies at once. Buyers of those bonds are Swiss pension funds and insurers whose mandates were written for stable domestic credit, not for the payback profile of data centers and accelerator purchases.

Europe's competition for mobile capital is visible elsewhere on the continent. Athens has persuaded the billionaire hedge fund manager Chris Rokos to move his tax residency to Greece and has held talks with other funds it hopes to attract with tax breaks, the Financial Times also reported. Cheap funding in one jurisdiction and favorable tax treatment in another are two versions of the same phenomenon. Capital moves to wherever the official terms are most generous, which is exactly the behavior a long period of suppressed interest rates encourages.