What happened
Major technology firms are increasingly employing off-balance-sheet financing mechanisms, specifically Special Purpose Vehicles (SPVs) and joint ventures, to fund artificial intelligence initiatives. This strategy has shifted approximately $120 billion in debt, with Meta securing $30 billion via an SPV and xAI seeking $20 billion through an SPV for chip leases. This represents a departure from traditional internal cash funding, with global tech companies issuing $428.3 billion in bonds in 2025, leading to increased leverage and weakened coverage ratios for some entities.
Why it matters
This financing shift introduces an operational constraint by increasing the opacity of financial liabilities within the technology sector. It raises due diligence requirements for procurement, finance, and risk management teams when evaluating the financial stability and long-term viability of partners, suppliers, and acquisition targets that utilise these complex structures. This creates a visibility gap regarding the true extent of debt obligations and potential hidden liabilities, increasing exposure to unforeseen financial risks and potential operational disruptions if AI investments underperform.
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