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Welcome everyone back to Markets Mindset.

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I'm Victor Forte, Head of 
IG Capital Markets at Mizuho,

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and I'm here with, again, Moshe Tomkiewicz, 
Head of Debt Capital Markets here.

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And Moshe, a lot has been going on in the market, you know, the war in Iran, new Fed chair,

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but we're sitting here on the eve of 
the rollout of another round of tech earnings.

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And what better thing to talk about than the impact that the increased tech supply has had

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on the market, and your views of where 
spreads are going to be going forward.

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One of the things I wanted to focus on today was something that's kind of changed a little bit

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in the complexion of the market, was some 
of the issuance sectors that we've seen 

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get real heavy lately, most notably the hyperscalers, right, in the tech space.

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So think about it, year-to-date, 
$1.3 trillion of issuance at this moment.

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Those numbers are up 102% on a net basis, 34% on an absolute basis, corporates up 41%.

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The numbers are holding steady,

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and we'll talk about that later

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at four plus times over subscription

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at about five basis point new issue concession,

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but the real thing is the issuance tied to AI,

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and obviously in the hyperscaler space,

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and when we look, you think about utilities,

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tech and communications,

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you have utility spaces up 47% 
year-to-date in issuance,

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tech up 117%, communications up 277%,

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so, the issuance is there,

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and we've seen the hyperscalers hit the market

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time and time again in multiple ways,

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but directly, obviously.

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Talk to me about how that supply has changed 
the complexion of what's in the market,

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it's changed the complexion of the 
indexes that people are looking at

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 and the opportunities that they have.

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Great question, so tech is clearly

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the sector of focus for the market.

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And it's funny, when you go back

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and look at where we were, call it a year ago,

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when this tech supply first hit,

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it was a bit of a shock to the market,

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it was a bit of a repricing for the market,

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but investors gradually got their arms around it,

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they looked at the balance sheet strength

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of most of these hyperscalers,

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they were looking at CapEx expenditures,

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which were up a lot, but they were manageable

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given the balance sheets that we were dealing with,

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so we built a big moat around tech.

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And we came into 2026, at least the market came in 2026, feeling like they had their arms around it.

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Correct.

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They knew what was coming.

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Correct, and what we didn't expect was that these CapEx expenditures were going to continue

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to get higher and higher and higher, 

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and that they were going to continue
to look at us to fund it,

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and then we were seeing a string of 
transactions that were coming out of the space

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that were underperforming in 
the secondary market.

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I know we'll talk about spreads later, 
but we've had a repricing of that sector.

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I know we'll talk about spreads later, 
but we've had a repricing of that sector.

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I know we'll talk about spreads later, 
but we've had a repricing of that sector.

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So with those deals not going well, and 
with the supply dynamic continuing to 

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increase out of the space, 
remember, when we think about tech,

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it's not just about hyperscalers, it's 
increasingly a multi-pronged phenomenon. 

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You have the hyperscaler universe,

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but now you have data center supply with a backlog of close to $100 billion of that.

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Then you need to fund the chips that 
are going to be housed in those facilities, 

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and that could be three to five X of 
what the actual data center financing is.

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And all these deals are being marketed 
off of the hyperscaler credit.

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That's a supply phenomenon that 
the market was not ready for.

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Well, let's look at those numbers, right?

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$54 billion approximate of 144A data center

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structured supplies come to the market 
since the Beignet deal from last year.

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There is, by the time this actually airs, 
you'll probably have another $12 billion

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that'll hit approximately.

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And then there's rumors of two other transactions that probably take us up somewhere around

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80 to 90 billion at least of data center, 144A 
supply that has as its ultimate credit,

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you know, the leases, the same 
hyperscalers you've been talking about.

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So it was interesting when we first had that issuance, as you do with a lot of structured—

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or semi-structured issuance, there's a
premium to the underlying credit

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that it starts out at and then it tightens in.

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What we're seeing now is a little bit of softening in that because we've gone from people

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understanding the structure to now having 
to deal with the fact that they see what,

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a lot of supply coming down the road and it's hard to determine where is that supply supposed

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to end up to clear relative to the 
underlying credits, I would assume?

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Correct, correct.

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And I think to your point about the index composition is an important one,

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because if you look at the market through that lens, 

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there is room to run in this sector 
from a capacity perspective.

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I think the best comp for tech is the financials.

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They're the biggest sector in the market,

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they issue in generally very big size.

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So that's a good one to look at.

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And they're about a little bit over 30% of the index where the hyperscalers are kind of mid single digit.

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So through that lens, there's a lot of room.

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But, that hyperscaler index doesn't 
include all the data center supply.

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And I think the way the financials approach 
the market relative to what we've seen

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in tech, comes at the expense of capacity.

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And what do I mean by that?

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Well, everybody knows when
 the banks are going to issue,

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they're going to issue right after they report.

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They're generally going to issue 10 years and in.

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And so that gives investors a fair amount of time to position appropriately ahead of that issuance.

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And when they do that, that increases the 
likelihood that they're going to perform well.

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That's the exact opposite 
situation we've seen in tech.

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How many surprise $25 billion deals 
have we seen in our space?

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—How many surprise CapEx 
announcements do you get?

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Exactly, exactly.

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So people aren't positioned for it.

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So the deals don't go as well as they should.

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And most importantly, they don't 
perform as well as they should.

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And that increases the likelihood that we start seeing a spillover effect into the broader market.

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So let's talk about that performance, right?

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We mentioned it before, which is, things
seem to be in good stead.

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You had one of the big hyperscalers, 
obviously hit a lot of different currencies 

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over the course of that time—

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A couple of them did—

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—diversified their funding, right?

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— a couple of them did, yeah.

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You also had one who kind of moved more to equity after getting through a lot of debt.

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There was a lot of diversification that was attempted by a lot of people.

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And we kind of ran into the end of 
May and sort of hit the tights.

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But if we look at what's happened since then, 
and we'll include the broader tech space too,

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you had the SpaceX 
transaction, which unfortunately

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 is wider by 50 to 60 basis points at this time.

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You've had each of the hyperscalers 
widen out anywhere from,

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call it 10 or 15 basis points to 20 to 30 basis points.

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Their curves have steepened 
over the last month and a half.

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Also lost 20 basis points plus in treasuries and 10-year treasuries since that moment in time.

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The interesting thing, I think, about it 
has been as that space adjusts

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to the potential of more supply, the rest of the market has been pretty ring-fenced.

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When I think about it, yes, the overall 
index spread is above 75

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right now we're sitting at 77, I think it was.

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But that pull's come from a lot of 
the tech and hyperscaler names.

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The rest of the market seems to be,

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I don't want to use the word oblivious to it, 
but it's been impregnable

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to kind of what's gone on in tech so far.

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But as we talked about in the past,

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we've seen credits, I remember 
in the old days, GE, 

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a lot of debt outstanding at one time for 
what they were, a AAA at that moment,

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traded wide of its name by 20, 30 basis points.

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We had some telecom companies who had large debt complexes outstanding that traded wide.

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We now have a bunch of companies who will have

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probably bigger debt complexes than any of those names I just mentioned at some point in time.

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They're now trading wider than

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where their ratings are supposed to 
put them and trending the wrong way.

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When do you think they've widened out?

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When do you think either they've gotten to the point where they can clear the kind of supply

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or where do you think the inflection point is where the rest of the market has to stand up

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and take notice on a relative basis?

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That's the question that every single 
strategist is trying to answer.

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And the only way you can really 
do for it is look for signs, all right?

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And so one of the big signs, to your point, 
is how is non-tech going in primary,

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and more importantly, 
how's it trading in secondary?

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And so far, both of those 
boxes have been checked,

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which when we see that, that 
means the moat is holding.

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I thought when we talk about the tech space being kind of firewalled or off to the side right now

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in terms of its performance,

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your team did a really good
analysis of tech versus,

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I think it was healthcare because they've 
had a lot of larger deals, M&A, etc.,

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over the last, call it, nine months plus.

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And the performance is striking 
between those two spaces, correct?

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And the performance is striking 
between those two spaces, correct?

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Yes, because if you look at that analysis,

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you'll see those healthcare deals out-traded 
tech by close to 30 basis points,

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which in IG is a really big number.

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And why is that?

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Well, when the healthcare deals 
come, it's for a finite M&A,

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could be a big deal, but it could also be
a smaller deal, but the market knows

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 exactly what needs to be funded

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and what does that represent of 
their funding need, all right?

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Tech, you just don't know that.

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And Meta announces a $25 billion
deal out of what?

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Because even if they told you out
of, this will represent X percent,

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that number can change in a month.

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Right.

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And so that puts credibility much more 
on the side of healthcare versus tech,

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and that's why we're seeing the type of outperformance we've experienced.

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So we obviously are going to get through tech earnings season here, that’s going to start,

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and that's going to really shape—

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Yeah, and I think—

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—the difference here.

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I think it's important to note that we're filming this on the day of Google releasing after the bell.

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And the market, given all the price 
action that we've seen in credit,

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and recently in the equity market,

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the market is going to be very fixated 
on the CapEx guide from Google,

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as well as the other hyperscalers.

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And if we're in a situation that we 
see a really adverse reaction 

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by credit on some of these announcements,

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that's a bad fact pattern 
for the equity market 

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because these guys are going to spend and if we start raising up the yellow flag in credit,

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they're going to just lean on that much 
heavier on the equity market.

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Right, now look, as you mentioned,

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by the time this airs, you're 
going to have started to get 

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the tech rollout of earnings, and 
that will shape a lot of this.

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So let's go back and let's close this on a little bit more forward-looking, generic view of the world.

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So we have Labor Day, latest it can be, 
September 7th this year.

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When you back up Labor Day, you 
don't back up blackout season.

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So you have a very compressed 
September for supply.

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Do you think that means we're going to have a pretty heavy August as people try to pull forward

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if they can, to kind of get away from September?

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And talk to me about,

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is that to just get away from September or is it 
to try to get as far in front of, maybe, midterms

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and other things 
going on right now?

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So I think August has a potential 
to be a record month for the market.

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I think part of that is driven 
by, obviously, the calendar.

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And I think it's more in 
terms of getting ahead

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of more tech supply and other 
supply than about the midterms.

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Given all the dynamics you talked about, I think spreads have hit a pretty hard floor.

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So unless we start viewing 2027 
as kind of peak CapEx for AI,

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unless we see a magical end to the war,

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 I think it's going to be tough for spreads to 
pierce the tights we saw earlier this year.

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Right, and to put that in context for people right, we hit, what, 71 on the Bloomberg Index in January.

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We were at 75, probably, sometime mid-May.

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We then came back down in and now 
we're back above 75 and trending

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the wrong way at this moment.

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Correct.

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So I'm going to summarize for you,

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you don't think there's really any end that you foresee right now to what's going on in Iran.

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Correct.

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Oil prices are back up at $84.

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VIX is inching back up,

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the MOVE index is back up a bit.

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You don't see any change in the 
Fed, given the data that's coming out.

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Hands are somewhat tied a 
bit to, kind of, do something.

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You think they're going to sit and wait?

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But if anything, they're going to lean in more hawkishly just given what's going on in oil.

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So there's my question for you, you're 
not looking at a rate hike here in July—

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No.

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—but when do you think that rate 
hike possibly kicks in?

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I think September's a live meeting,

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which is why those couple
of days after Labor Day 

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have been such a discussion point with our borrowers looking at the market in that timeframe.

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Moshe, thanks again for being here.

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It was a pleasure as always.

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And I guess we'll be back together in 
about two months after the summer

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and after the Fed's meeting and 
we'll take stock of what happened.

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Until then, thanks everybody for joining 
here at Markets Mindset.

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Thank you.