Europe’s debt stress is hitting corporate borrowing costs. Goldman flags who’s vulnerable

Europe's sovereign debt worries are starting to show up in corporate borrowing costs, potentially leaving some companies with less cash to invest or return to shareholders, according to Goldman Sachs.Corporate borrowers in Europe are being squeezed from two directions — rising yields in government debt and surging U.S. hyperscalers' bond issuance, which is increasing competition for capital.Hyperscaler debt issuance is set to increase from $250 billion in 2026 to $420 billion in 2027, Goldman Sachs said in an Oct. 23 note, while global artificial intelligence project finance could double to $300 billion as tech giants increasingly turn to bond markets to fund the AI investment build-out.That comes against a backdrop of rising borrowing costs globally. Yields on France's 10-year government bonds, known as OATs, moved beyond 5% on Oct. 21 for the first time since 2002. The spread over Germany's 10-year Bunds peaked at more than 177 basis points a day later, amid concerns about spillover risks elsewhere in Europe. Developed economies including the U.S., the U.K. and Japan have also faced similar borrowing pressures this year.Debt costs riseWith credit conditions tightening, Goldman an...