Saba Capital Management has recently increased the amount of credit default swaps on big tech firms it sells to banks as capital expenditures related to artificial intelligence infrastructure have increased debt, according to Reuters.
Lenders have purchased CDS’s from Saba, which was founded by the hedge fund manager Boaz Weinstein, on Oracle (ORCL), Microsoft (MSFT), Meta Platforms (META), Amazon (AMZN) and Google (GOOG)(GOOGL), according to the report. Oracle and Google CDS’s are trading at their highest levels in two years. Although the numbers of big tech CDS’s have increased recently, the levels are still less than those observed in other sectors.
A CDS is a derivative contract that acts like an insurance policy against the default of a specific debt instrument. CDS five-year spreads for Oracle reached 105 basis points last week, while Google and Amazon traded around 38 bps and Microsoft traded around 34 bps, according to the report, citing S&P Global data.
“Some of this is concern about AI corporate bond supply over the next few quarters after a surprise surge in recent weeks,” said Deutsche Bank’s Jim Reid in a note, the report said. “However, it seems that they are also being used as a general hedge for all sorts of positive AI positions.”
Late last month, Meta revealed it planned to raise money through bond offerings worth up to $30B. Meta said it plans to spend $600B on AI infrastructure through 2028. In September 2025, Oracle sold $18B in investment-grade bonds.