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AI infra boom faces financing risks as data centre bond spreads widen: Goldman Sachs

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AI infra boom faces financing risks as data centre bond spreads widen: Goldman Sachs

Business News Tech AI AI infra boom faces financing risks as data centre bond spreads widen: Goldman Sachs

AI infra boom faces financing risks as data centre bond spreads widen: Goldman Sachs

The report said high-yield bonds issued by data centre companies are facing pressure as investors assess the risks of financing the rapid expansion of AI infrastructure.

Growing concerns over the financing of artificial intelligence (AI) infrastructure are raising questions about whether credit markets can sustain the massive investments required to build data centres, according to a Goldman Sachs research report. The report said high-yield bonds issued by data centre companies are facing pressure as investors assess the risks of financing the rapid expansion of AI infrastructure. "We've seen significant moves across the market as investors debate whether credit can continue financing the AI build-out," the report said.

Goldman Sachs said investors should assess each project individually rather than assume that all AI infrastructure investments carry similar risks. Amanda Lynam from the firm's credit research team said investors need to examine construction risks, the ability to repay loans, refinancing requirements and claims against tenants while evaluating data centre projects. She also highlighted power availability, regulatory approvals and insurance as key factors that could affect project viability. The concerns come as the AI industry's growing demand for computing capacity drives investment in data centres and related infrastructure. However, the report stressed that the financial risks must be assessed at the individual project level. The approach is also important for equity investors as companies across sectors increase their exposure to data centres, potentially taking on higher investment risks.


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