AI has pushed global equity markets to record highs — but behind the scenes, the infrastructure powering AI is being financed by an unprecedented surge in debt. A new UBS report shows AI data-centre and project financing deals have skyrocketed to $125B this year, up from just $15B in 2024.
Credit markets are bracing for even more supply heading into 2026.
Here are the five key areas where debt is piling up:
1️⃣ Oracle: CDS Spike Signals Investor Anxiety
Oracle shares are down 44% from September highs as heavy AI spending raises questions about timelines for returns.
- Moody’s flagged risks in new contracts
- Oracle’s CDS have jumped to 5-year highs, reflecting increased concern about its leverage
- Saba Capital has been selling credit protection to lenders seeking default insurance on Oracle and Microsoft
2️⃣ Investment-Grade Debt Issuance Surges
Big Tech is now a major force in IG markets:
- Oracle issued $18B
- Meta issued $30B
- Alphabet also tapped markets
AI-linked borrowers now represent 14% of JPMorgan’s IG index — surpassing U.S. banks — although still small compared to the $1.6T total IG issuance expected in 2025.
3️⃣ High-Yield AI Bonds Hit Record Levels
The junk-bond market is seeing unprecedented AI-linked issuance.
But concerns remain:
“It’s untested… you need to be compensated like equity, not debt,”
said Al Cattermole of Mirabaud, citing risks around budget overruns and uncertain demand for data-centre capacity.
4️⃣ Private Credit’s Rapid Expansion in AI Funding
Private credit is increasingly stepping in as banks pull back.
- UBS estimates private credit AI loans nearly doubled over the past year
- Morgan Stanley expects private credit to supply over half of the $1.5T needed for data-centre buildout through 2028
5️⃣ Securitisation (ABS) Goes AI
ABS tied to digital infrastructure have grown 9× in five years to $82B, representing 5% of the U.S. ABS market.
- 63% of digital infrastructure ABS is backed by data centres
- Expected supply: $50–60B in 2026
But ABS remain sensitive territory for investors given the 2008 legacy of illiquid and complex structures.
📌 The Bottom Line
AI’s explosive growth depends on massive, debt-fueled infrastructure — creating opportunities across credit markets, but also heightening systemic risks if valuations or demand expectations falter.
As the Bank of England warns, the intersection of AI and leveraged infrastructure is quickly becoming a financial stability watchpoint.