Morgan Stanley and JPMorgan are leading the charge in providing debt financing for the artificial intelligence boom, arranging significant bond deals for tech companies investing heavily in AI infrastructure. Morgan Stanley has notably increased its market share in arranging US investment-grade bond deals, driven by its AI focus and strategic push into debt capital markets. They have led or co-led approximately $65 billion in corporate bond deals for data centres and other AI investments since October.
This surge in AI-related borrowing has propelled AI-linked firms to represent a substantial portion, around 14%, of JPMorgan's investment-grade index, surpassing US banks. The AI sector is projected to require substantial debt financing, with estimates suggesting trillions in bonds will be needed to cover data centre construction costs alone. While this influx of capital has fuelled excitement, concerns linger regarding a potential AI bubble and the long-term profitability of these investments.
Private credit markets are also playing an increasing role in AI funding, potentially supplying over half of the $1.5 trillion required for data centre build-out through 2028. Asset-backed securities are emerging as another avenue for funding AI industry growth, bundling together illiquid assets like loans and data centre rents into tradable securities.
