DBS CEO Tan Su Shan said financial markets are reassessing the risks associated with AI investments, a shift that could bring greater discipline to AI financing.

Speaking to Bloomberg Television on 12 October, Tan said investors are demanding higher returns and examining financing structures more closely.

“It’s not a bad thing because now, people are asking for higher returns, and people are also looking at structures.”

According to Tan, investors want assurance that spending on AI infrastructure will generate sufficient long-term returns to repay lenders and bondholders while providing returns to equity investors.

She warned that financially weaker companies could face credit rating downgrades as markets reassess their exposure to AI-related investments.

However, Tan described the repricing as healthy, as investors seek to ensure that large financial commitments remain sustainable.

DBS has originated approximately S$25 billion in AI-related financing deals so far this year, according to Tan.

The bank frequently acts as lead manager for syndicated loans, which involve multiple lenders jointly providing financing, while retaining only a small portion of the loans on its own books.

Most of the financing supports hardware infrastructure, including semiconductors, memory chips and data centres.

The developments come as major technology companies invest billions in AI infrastructure, while stock market gains remain concentrated among a handful of companies.

Rising interest rates and higher bond yields have also increased the cost of financing large-scale AI infrastructure projects.

PwC estimates that cumulative data centre spending across Asia-Pacific could reach US$8.2 trillion by 2050.

Tan made the remarks on the sidelines of a DBS conference focused on AI and geopolitical developments.

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