Global Bond Market Reversal: Why Investors Now Prefer Big Tech Over Big Governments

A profound shift is underway in the US$150 trillion global bond market: investors increasingly see mega-cap companies as safer than the governments backing their currencies.

Driven by rising government debt, political gridlock, and disciplined corporate balance sheets, investors are accepting lower yields from companies like Microsoft, Airbus, L’Oréal and Siemens than from the sovereign bonds of the US, France or Germany.

It’s a reversal of financial orthodoxy — and it’s accelerating.

Governments Keep Borrowing, Corporates Keep Cutting

Since the pandemic, companies have aggressively cut costs, trimmed debt, and protected margins despite higher interest rates.

Governments did the opposite.

• G7 debt-to-GDP is set to keep rising through 2030.

• Trump’s recent tax cuts may add US$3.4 trillion to US deficits over 10 years.

• France faces political deadlock and chronic deficits.

• Germany is bending its own fiscal rules to boost defence and infrastructure.

Bond investors are taking notice.

“People prefer corporate balance sheets which are in better shape than some sovereigns,” says Pilar Gomez-Bravo of MFS International.

Microsoft, Siemens, L’Oréal Now Yield Less Than Their Governments

When investors feel safer holding Microsoft bonds than US Treasuries, the message is clear:

Balance sheets trump political promises.

• Microsoft has net debt equal to just 10% of its last 12 months’ earnings.

• French corporates such as Orange now trade at lower yields than France’s own bonds.

• About 5% of French IG corporate notes yield below French sovereign debt.

Corporate credit upgrades across the US and Europe are now the strongest in a decade — while sovereign downgrades are becoming more frequent.

Demand for Corporate Debt Is Surging

Investors are flooding into corporate bonds, pushing spreads to their tightest levels since 2007.

Recent mega-deals show the scale of demand:

• Meta’s US$30B bond sale drew US$125B in orders — one of the highest in history.

• Alphabet’s US$25B offering attracted US$90B in bids.

Even the AI spending frenzy hasn’t scared buyers away.

Demand continues to exceed supply — especially in US investment-grade credit.

Why Investors Are Losing Faith in Sovereigns

The shift reflects concerns that developed-world governments have:

• Weak political resolve

• Ballooning deficits

• Overreliance on central banks

• No appetite for unpopular fiscal tightening

“Governments just sit there, carry on and nothing happens. Corporates have done their job.”

— Steffen Ullmann, HAGIM GmbH

As fiscal pressures grow, the risk of bondholder losses — or future tax hikes on profitable companies — looms larger.

But Corporate Bonds Are Not a Perfect Safe Haven

Despite the momentum, corporates still carry risks:

• Lower liquidity than sovereign debt

• Higher long-term risk premiums

• Exposure to economic cycles

• Potential taxation during crises

Yet with sovereign debt trending higher for the rest of the decade, many investors believe corporates may stay the safer option — at least for now.

Key Takeaways

• Mega-cap corporates are now yielding less than sovereign bonds — a rare reversal signalling declining confidence in government finances.

• Corporate balance sheets have strengthened, with leverage at its lowest levels since the financial crisis.

• Government debt is rising unchecked, driven by populist spending and political paralysis.

• Investor demand for high-grade corporate bonds (Meta, Alphabet, Microsoft) is overwhelming supply.

• The shift marks a fundamental change in global credit sentiment that may persist as fiscal risks escalate.