How to Navigate the AI Debt Bubble

How to Navigate the AI Debt Bubble

We explore the expected size of AI-related debt, which vehicles hold it, what could go wrong, and how to protect yourself.

Topics covered include:

  • How AI capex boom compares to other large booms and busts
  • What fixed income vehicles hold AI-linked debt
  • What mechanisms are being used to transfer AI-debt risk.
  • How circular finance is contributing to the AI infrastructure buildout
  • What could go wrong with the AI infrastructure buildout that could lead to losses on AI-related debt
  • How to tell what exposure you have to AI debt


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Show Notes

AI debt slide deck used for episode

RBC Weighs $2 Billion Risk Transfer to Hedge Data Center-Linked Loans by Esteban Duarte and Paula Sambo—Bloomberg

Hyperscalers Tap External Financing as AI Capex Outruns Cash Flow—FactSet Insight

What History Tells Us About The AI Investment Boom by Larry Swedroe—Financial Advisor

Goldman Sachs Warns on AI’s Debt Tsunami — Is This the End of the AI Boom? by Rich Duprey—Yahoo! Finance

Progress and peril by Pablo Hernández de Cos—BIS

The Opportunities and Risks AI Presents for the Economy and Financial System by Governor Lisa D. Cook—The Federal Reserve

Financial Stability Report by The Board of Governors of the Federal Reserve System—The Federal Reserve

Financing the AI infrastructure boom: on- and off-balance sheet borrowing by Egemen Eren, Ingomar Krohn and Karamfil Todorov—BIS

How AI debt financing impacts duration supply and interest rates by Hugo De Vere, Srini Ramaswamy and Seth Searls—Federal Reserve Bank of Dallas

US Life Insurers Held $807 Billion of Hard-to-Sell Credit by Alexandre Rajbhandari—Bloomberg

Insurers are funding AI infrastructure – NAIC wants to know if the ratings hold up by Paul Lucas—Insurance Business

US Corporate Bonds Statistics—sifma

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