00:00Why are we issuing in Canadian dollars in Europe? Why the big push to diversify the currencies that this debt
00:05is issued in. So I think the simplest answer is they need every dollar they can possibly get. So they've
00:10already tapped the U.S. market several times. Alphabet went to Europe earlier in the year. They did 100 year
00:15in Europe earlier in the year in the U.K. but they need more. And so they didn't want to
00:21come to the U.S. market this time. And I think they're going to save that for later if they
00:24need it. But for now it's almost like going to the couch cushions. You know the Canadian market isn't that
00:28big. And to do eight and a half
00:29billion dollars of Canadian dollars. That is an enormous deal. It's the largest deal in history over there. So now
00:34the AMD question. So I'm sitting in AMD stock just receiving all the money. Thank you for the debt investors
00:38who have been funding all of this. What does the debt investor get out of this. So we get a
00:44higher premium than we've ever gotten in tech before. So these used to be really tight trading names that really
00:49didn't have a lot of spread to them. They now have some yield to them. But at the end of
00:53the day the focal point is whether or not the U.S. market or the global I.G. market can
00:57continue to fund this.
00:58Because if this stops then I do think that the overall trade ends. But for now we continue to like
01:03this. We are getting a little bit debt saturated debt fatigued tech debt fatigued. But overall it's still these are
01:09great companies that have really low lever balance sheets. How would Canadians debt market feel about being compared to the
01:14couch cushions. You have to go there to find some nickels under their couch cushions. I'm just saying. Let's hope
01:19Connie's not listening this morning. He might take some issue with that. To the point though that you're saying we
01:24are getting a bit saturated.
01:25At what point do you actually expect to start seeing meaningful pushback from investors. Because so far maybe some people
01:32say that they're not that happy with it. But they're buying in droves.
01:35Yeah. And what's interesting if you look at like a name like Meta and Oracle they're actually telling you how
01:40often they're going to issue. But they're being truthful but they're not being truthful and I'll tell you why.
01:44So Oracle says we're not going to issue any more. They did 25 billion earlier this year. But then they
01:48do this special purpose vehicle that they called Project Mittens which was the state of Michigan looks like a mitten.
01:54So they have this special purpose vehicle to look to that's 14 billion dollars that's leased to them. But it's
01:59not Oracle debt. Meta said we're not going to come back for another quarter at least when they did 25
02:04billion dollars last week.
02:05And then a few days later you guys report a headline that Project Sopa y Pija which is El Paso
02:12data center will be coming leased to Meta and that might be 14 billion dollars.
02:16So they keep telling you they're not going to be borrowing because it's not actually unsecured debt. But then they're
02:21doing another deal. And we say OK we're not going to buy any more.
02:24But then it comes pretty cheap. And we say well these are great companies. We do believe they're going to
02:27be around the structure sound. But you got to pay us more.
02:31And so that right now it's just every time they're coming cheaper and cheaper in order to incentivize us to
02:35buy it.
02:35At what point do you start to say you have to pay us a lot more to not just go
02:40into treasuries and go into your stock?
02:42Because ultimately there is potential downside given the concentration risk at a certain time.
02:47But the upside is just getting paid back. Correct. And that's the life of a credit investor.
02:52We don't have the upside that the equity market has. So we do protect ourselves.
02:56A lot of things that we're looking for in these deals that the market is pushing back on is asking
03:00for more amortization.
03:01Particularly if it's something that's backed by chips. You need it to amortize as fast as possible to get your
03:06money off the table.
03:07You're also seeing certain things like lease clauses.
03:09We want to have these data centers actually built. Originally they were doing them and they were projects and they
03:14weren't even being done.
03:15Now we say the project needs to be done. It needs to be in place with a high quality hyperscaler
03:20for a long time.
03:21But when that lease rolls we want them to not have any debt outstanding.
03:25So we don't have any take any any rent roll risk on the tenant as well.
03:28That's why I'm joking. I'm sitting in the stock just saying thank you. Thank you for funding all of this.
03:33I'm high this morning by 18 percent.
03:35And you hear some investors who aren't just focused on credit say why not just barbell it.
03:40Put some money in treasuries if you want the sort of credit component and just buy the stock because that's
03:45where the upside is.
03:46Of course potentially there's also the downside and maybe you could also get your money paid back.
03:50So I'm going to give you a pitch also for credit.
03:51Matt I'm interested in the feedback loop as well between markets, the spending, markets, the spending.
03:56Are we just seeing that feedback loop continue? Any breaks in that whatsoever?
04:00Are the incentives just lining up for more of the same in the year to come?
04:03So two quarters ago the incentive was to tell everybody that you were adding to CapEx that you were going
04:08to do more.
04:09And that's gone away because the debt markets did push back particularly started with Oracle where they said look it
04:14looks like you're going to keep borrowing a lot.
04:15And the stock started going down.
04:17And I think it was because the debt markets credit default swaps went wider bonds cash spreads.
04:22Is that Oracle specifically or are we seeing some guardrails around the whole sector now?
04:26It was mainly Oracle but I think everybody gets a little bit nervous when Amazon tells you it's 200 billion
04:31dollars.
04:32Meta came out this time they increased it by 10 billion and that wasn't a lot but their stock was
04:36immediately down.
04:36I think a lot of it is because people are saying we want to see where this is paying for
04:41where the results are going to where the cash flow is going to come from.
04:44But the companies are saying this is too big of an opportunity.
04:46We're not going to miss it.
04:47We're not going to miss it.
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