Investors are treating AI-related debt differently based on risk. Broad, unsecured bonds from hyperscalers are widening due to long-term investment risk. In contrast, securities backed by existing, cash-flowing data centers (ABS and CMBS) are more stable because the assets are already operational and leased.
Major hyperscalers with AA ratings are relatively insensitive to higher borrowing costs because their expected returns on AI investments exceed 25%. In contrast, lower-quality developers are constrained by wider spreads, making funding costs a 'natural stabilizer' of new supply from smaller players.
As AI capex shifts from data center shells to compute equipment like servers and chips, private capital will play a larger role. Top-tier hyperscalers will facilitate this by using their strong balance sheets to provide credit support and guarantees, de-risking these asset-level investments for private lenders.