Key facts
- Some lenders are reluctant to finance AI deals even when backstopped by Anthropic or Google, several banking and credit sources said.
- Goldman Sachs Research projects global hyperscaler debt issuance of $420 billion in 2027, over 60% above its $250 billion estimate for fiscal 2026.
- JPMorgan's loans backed by other income-producing properties, including data centers, were $29 billion outstanding at the end of the third quarter, 12% of its commercial real estate exposure.
- The spread on 10-year hyperscaler debt widened about 50 basis points year to date versus roughly 20 basis points for high-quality industrial companies not tied to AI, per Bank of America's Yuri Seliger.
- CoreWeave's stock has fallen 35% year to date and its bond prices dropped on the secondary market, per the report.
- Anthropic, Google and JPMorgan declined to comment; Nebius did not respond to a Reuters request for comment.
Banks and credit investors are increasing scrutiny of AI-related debt deals and showing reluctance to add exposure to borrowers, several banking and credit sources told Reuters, after a market selloff and a change in sentiment toward the technology's growth trajectory.
Some banks that had been lining up to fund AI deals in preceding weeks are now telling market participants they would be reluctant to finance additional deals even when they involve guarantees from marquee technology companies, the sources said. Some lenders showed reluctance to finance deals even if backstopped by names such as Anthropic and Google, two sources said, without naming the lenders. Anthropic and Google declined to comment.
The pullback was exacerbated by a stock market drop that erased $2.5 trillion in market value from the Nasdaq 100 on Thursday and sent the index into a correction, per the report. US midterm election results are also adding anxiety about more oversight of data centers, the report said.
"Over the past year there was unbridled enthusiasm to provide debt to neoclouds, anyone who was building data centers or some sort of AI asset," said Chris Poggi, finance partner at Ropes & Gray, referring to companies that rent out AI computing capacity. "Debt investors' books have become full and now they are assessing if they have extended themselves as much as they're going to extend themselves this year."
Goldman Sachs Research projects global hyperscaler debt issuance will reach $420 billion in 2027, more than 60% above its $250 billion estimate for fiscal 2026. Investors and lenders are stress-testing cash flows for downturns and scrutinizing contractual details including service obligations, operational deadlines and conditions under which large technology customers could reduce or terminate commitments, two sources said.
At JPMorgan Chase, loans backed by other income-producing properties, including data centers, were $29 billion outstanding at the end of the third quarter, the bank's second-largest commercial real estate exposure at 12% after apartment buildings, up from 8% three years earlier. JPMorgan declined to comment.
The spread on 10-year hyperscaler debt widened by about 50 basis points year to date, versus roughly 20 basis points for high-quality industrial companies not tied to AI, according to Bank of America credit analyst Yuri Seliger. Bond prices of Meta, issued earlier this year, and SpaceX are trading below par, per the report.
"The kind of deals we look at, we are very focused on the risk aspect. So we structure the deals around to make sure that the cash flow is there," said OCBC Group CEO Tan Teck Long on Friday during an earnings briefing.
The pullback has been pronounced among riskier AI borrowers such as neocloud companies and standalone data center operators. Oracle and CoreWeave are among neocloud companies that could be impacted by possible construction delays or moratoriums, according to Baird Equity Research. CoreWeave's stock has fallen 35% year to date and its bond prices dropped on the secondary market, per the report.
Nebius had been exploring a high-yield bond issue in September but decided not to go ahead last month, one source familiar with the matter said. Nebius did not respond to a Reuters request for comment. In October it entered a $3.5 billion senior secured loan facility provided by Citigroup for data center development, GPU procurement and general corporate purposes.
"Most banks and credit investors will take a wait and see approach," said Jay Bala, co-founder and CEO of $300-million alternative asset manager AIP, referring to how AI growth will fare following the Democratic sweep of Congress in the midterms.