As the world’s largest and most liquid bond market, Treasurys continue to benefit from demand driven by the U.S. dollar’s status as the global reserve currency, deep institutional participation and the federal government’s historically strong credit profile, even after recent sovereign credit rating downgrades. Beyond soaring equity valuations, many of the largest technology companies have turned to the debt market to fund massive capital expenditure programs without issuing new shares and diluting existing shareholders.
Since the beginning of 2025, Alphabet Inc. (ticker: GOOG, GOOGL), Meta Platforms Inc. (ORCL) have collectively issued more than $300 billion of corporate debt.
(NVDA) issued $25 billion of investment-grade bonds in June 2026, while Space Exploration Technologies Corp. (SPCX) followed shortly after its initial public offering with a $25 billion corporate bond offering. Most of these companies enjoy investment-grade credit ratings of BBB or higher, allowing them to borrow at relatively attractive interest rates.
Still, the surge in issuance means investors should look beyond average maturity or credit quality when evaluating bond funds. Those seeking to avoid concentrated exposure to the technology sector, for example, may also want to review the underlying bond holdings and issuer weights within the portfolio. Tax treatment is another important consideration.
Unlike Treasury securities, whose interest is exempt from state and local income taxes, or many municipal bonds, whose interest may be exempt from federal income taxes, corporate bond interest is generally taxed as ordinary income at both the federal and, where applicable, state level. For investors in higher tax brackets holding these funds in brokerage accounts, that can materially reduce total returns. That being said, corporate bonds typically offer higher yields than Treasury securities of similar maturity to compensate investors for taking on additional credit risk.
Holding them through an exchange-traded fund, or ETF, also provides greater diversification and the convenience of monthly income distributions rather than t…
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