Key Takeaways
- • A poll of attendees at PitchBook's Private Credit Connect: East conference in Miami found 41%, a plurality, considered digital infrastructure the greatest private credit opportunity for 2027.
- • Ares co-head of alternative credit Kevin Alexander estimated roughly $1.3 trillion in data center development spending in 2027, a forecast other lenders considered realistic.
- • Apollo and Blackstone led a $36 billion investment-grade structured notes deal, backstopped by Broadcom, to buy GPUs leased to Anthropic, while Blue Owl's $27 billion joint venture with Meta financed the 5-gigawatt Hyperion data center.
- • UBS estimates hyperscalers carry $800 billion in cumulative debt, rising to $3.5 trillion in total obligations net of cash once off-balance-sheet commitments are included.
- • Lenders are wary of weak borrowers and fashionable labeling: Thoma Bravo and Bain Capital warn of cash-burning AI ecosystem companies and "plumbing business" deals repackaged as data center exposure.
Summary
Private credit lenders are eager to finance the data center boom, which they describe as a "once-in-a-career" financing wave, even as concerns persist that the market is untested and could eventually overheat. According to PitchBook, lenders at the Private Credit Connect: East conference in Miami highlighted the opportunities created by the AI investment cycle. In a poll of attendees, 41% named digital infrastructure the greatest opportunity for private credit in 2027.
Kevin Alexander, co-head of alternative credit at Ares, summarized the demand: "Everybody and their mother needs a data center." He estimated roughly $1.3 trillion of data center development spending in 2027, a forecast others at the conference considered realistic. Data center developers have already produced some of the largest deals in private credit history. Earlier this year, Apollo Global Management and Blackstone led a $36 billion investment-grade structured notes deal, backstopped by Broadcom, to purchase GPUs leased to Anthropic. In October 2025, Blue Owl struck a $27 billion joint venture with Meta to develop and own Meta's Hyperion data center, a 5-gigawatt campus financed through a private offering in which PIMCO participated.
Most lenders acknowledged the risks of financing the AI buildout, though many argued they can be managed through structuring and positioning. Victoria Chant, senior managing director and global head of capital markets and bank relations at Blackstone, said the capital being deployed falls well short of demand, which gives lenders the ability to "pick the things that you do." Outside the newer GPU financing market, where operators borrow against depreciating processor hardware, lenders have found attractive exposure to construction and architecture companies. Fortress chief strategist Elizabeth Burton noted that, although the winners of the AI ecosystem are uncertain over five to 10 years, the buildout has created patents and intellectual property likely to retain value.
Skepticism remains. Jeff Levin, head of credit at Thoma Bravo, warned that many companies in the ecosystem do not generate cash and depend entirely on financing markets, and expressed concern about contagion if demand slows, with the cost of capital rising amid the rate environment. UBS, in a late-September research report, warned that a failure by a major AI research lab to scale profitably could produce outcomes ranging from an orderly adjustment to severe contagion. Avi Korn, KKR's global co-head of asset-based finance, said borrowers are not getting less levered and may take their credit ratings "to the brink," meaning today's deals may look less attractive later. Alexander added that capex and free cash flow "are going to be tested at some point."
Even in core middle-market direct lending, the data center trend has created distortions. Michael Ewald, global head of Bain Capital's private credit group, cautioned that attaching a data center label to a business "sounds super sexy" but may amount to a plumbing business, comparing it to earlier physician practice management deals that caused problems for direct lenders. "You have to have a bit of a jaundiced eye," he said.
Kevin Alexander, co-head of alternative credit at Ares, summarized the demand: "Everybody and their mother needs a data center." He estimated roughly $1.3 trillion of data center development spending in 2027, a forecast others at the conference considered realistic. Data center developers have already produced some of the largest deals in private credit history. Earlier this year, Apollo Global Management and Blackstone led a $36 billion investment-grade structured notes deal, backstopped by Broadcom, to purchase GPUs leased to Anthropic. In October 2025, Blue Owl struck a $27 billion joint venture with Meta to develop and own Meta's Hyperion data center, a 5-gigawatt campus financed through a private offering in which PIMCO participated.
Most lenders acknowledged the risks of financing the AI buildout, though many argued they can be managed through structuring and positioning. Victoria Chant, senior managing director and global head of capital markets and bank relations at Blackstone, said the capital being deployed falls well short of demand, which gives lenders the ability to "pick the things that you do." Outside the newer GPU financing market, where operators borrow against depreciating processor hardware, lenders have found attractive exposure to construction and architecture companies. Fortress chief strategist Elizabeth Burton noted that, although the winners of the AI ecosystem are uncertain over five to 10 years, the buildout has created patents and intellectual property likely to retain value.
Skepticism remains. Jeff Levin, head of credit at Thoma Bravo, warned that many companies in the ecosystem do not generate cash and depend entirely on financing markets, and expressed concern about contagion if demand slows, with the cost of capital rising amid the rate environment. UBS, in a late-September research report, warned that a failure by a major AI research lab to scale profitably could produce outcomes ranging from an orderly adjustment to severe contagion. Avi Korn, KKR's global co-head of asset-based finance, said borrowers are not getting less levered and may take their credit ratings "to the brink," meaning today's deals may look less attractive later. Alexander added that capex and free cash flow "are going to be tested at some point."
Even in core middle-market direct lending, the data center trend has created distortions. Michael Ewald, global head of Bain Capital's private credit group, cautioned that attaching a data center label to a business "sounds super sexy" but may amount to a plumbing business, comparing it to earlier physician practice management deals that caused problems for direct lenders. "You have to have a bit of a jaundiced eye," he said.
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