{
  "id": 19144062,
  "title": "Banks, investors grow wary of AI debt, spooked by market selloff",
  "url": "https://urgent.news/2026/11/09/banks-investors-grow-wary-of-ai-debt-spooked-by-market-selloff",
  "topic": "ai",
  "section": "AI",
  "published": "2026-11-09T11:08:27.000Z",
  "source": {
    "name": "Economic Times Tech",
    "slug": "economic-times-tech",
    "url": "https://economictimes.indiatimes.com/tech/artificial-intelligence/banks-investors-grow-wary-of-ai-debt-spooked-by-market-selloff/articleshow/135679930.cms"
  },
  "original_language": "en",
  "account": "Financial institutions are exhibiting caution towards AI-linked debt instruments, driven by market volatility and shifting perspectives on the technology's growth prospects. Previously eager to finance AI deals, certain banks now express reluctance to provide additional funding, even for projects backed by prominent technology companies. This shift has been precipitated by a recent decline in stock market values, amounting to $2.5 trillion erased from the Nasdaq 100 index, and the potential impact of US midterm elections on data center oversight.\n\nThe slowdown in AI data center construction could hinder loan growth and diminish investment banking revenue generated from loans, bond sales, and stock offerings. This development, noted by several banking and credit sources, has materialized within a short span. Some lenders have become hesitant to finance deals, even if they are secured by reputable names like Anthropic and Google, without disclosing the specific lenders involved.\n\nDebt investors' portfolios have reached capacity, prompting them to evaluate whether they have maximized their exposure for the year. Despite this, the AI loan market continues to receive supply, as borrowing requirements remain substantial. Goldman Sachs Research anticipates global hyperscaler debt issuance to reach $420 billion in 2027, a figure surpassing the projected $250 billion for fiscal 2026.\n\nInvestors and lenders are also rigorously evaluating cash flows for potential economic downturns and scrutinizing contractual aspects of AI infrastructure projects, such as service obligations, operational deadlines, and conditions that enable large technology clients to modify or terminate commitments. Many of these deals are intricate, with chipmakers often providing senior debt for advanced chip purchases and guaranteeing payments on data center leases.\n\nJPMorgan Chase, for instance, reported loans backed by data centers at $29 billion as of the third quarter, representing a 12% share of the bank's commercial real estate exposure, up from 8% three years ago. This surge mirrors the increasing emphasis on data centers within JPMorgan's loan portfolio. However, like direct lenders, investors have become increasingly selective in their backing of deals. The spread on 10-year hyperscaler debt has expanded by about 50 basis points year-to-date, compared to 20 basis points for high-quality industrial companies not related to AI, according to Bank of America credit analyst Yuri Seliger. Bond prices of Meta and SpaceX, both issued earlier this year, are trading below par value.\n\nIn Asia, some banks are ensuring that deals are supported by cash flow and conducting thorough risk assessments. OCBC Group CEO Tan Teck Long emphasized during a recent earnings briefing that the company focuses on the risk aspects of deals, structuring them to guarantee sufficient cash flow. Riskier AI borrowers, such as neocloud companies and standalone data center operators, have been particularly affected by the pullback. Oracle and CoreWeave are among the neocloud companies potentially impacted by construction delays or moratoriums, with their stock prices plummeting and bond prices declining on the secondary market.\n\nFurthermore, planned bond offerings tied to data centers and chips have been postponed. Notably, Nebius, a neocloud firm, had planned a high-yield bond issue in September but decided against proceeding last month. Additionally, Nebius entered into a $3.5 billion senior secured loan facility with Citigroup for data center development, GPU procurement, and general corporate purposes. Most banks and credit investors are adopting a wait-and-see approach, awaiting the trajectory of AI growth following the Democratic victory in the midterms.",
  "summary": "Some banks, which just a few weeks ago were lining up to fund AI deals, are now telling market participants they would be reluctant to finance additional deals even when they involve guarantees from the sector's marquee technology companies, according to several banking and credit sources.",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}