Key Takeaways
- • Moody's Ratings said on October 27, 2026 that AI infrastructure borrowing is pushing private credit beyond traditional corporate lending, with a wave of loans maturing between 2027 and 2029 that could leave weaker borrowers struggling to refinance at higher rates.
- • Moody's expects capital spending by the five largest US hyperscalers and CoreWeave to reach nearly $1 trillion in 2027, financed through cash flows, debt, joint ventures and special-purpose vehicles.
- • About 17% of the 607 borrowers tracked by Moody's used payment-in-kind interest, deferring cash interest payments while adding to their debt burden.
- • A Reuters analysis earlier this year found US business development company loan maturities would peak in 2028 and 2029.
- • Moody's flagged "circular" financing risks among technology companies, chipmakers and AI developers that invest in, lend to and buy from one another, raising the prospect of correlated exposures weakening together in a downturn.
Summary
Moody's Ratings said on Tuesday that heavy borrowing to fund artificial intelligence infrastructure is expanding private credit beyond its traditional corporate lending base, but that a cluster of loan maturities over the next few years could leave weaker borrowers unable to refinance on acceptable terms, according to Reuters.
The ratings agency said AI financing needs now extend well beyond data-center construction to land, power, semiconductors, graphics processing units and tensor processing units. Moody's expects capital spending by the five largest US hyperscalers and CoreWeave to approach $1 trillion in 2027, funded through operating cash flows, debt, and structures such as joint ventures and special-purpose vehicles.
The refinancing concern centers on loans coming due between 2027 and 2029, which Moody's said will test the ability of weaker borrowers to refinance at higher interest rates. Moody's noted that about 17% of the 607 borrowers it tracks used payment-in-kind interest, a structure that lets companies defer cash interest payments while adding to their debt load. Reuters separately found earlier this year that loan maturities at US business development companies would peak in 2028 and 2029.
The report also references recent stress in CoreWeave's debt, which has heightened investor concern about highly leveraged AI borrowers. Moody's additionally flagged "circular" financing risk, as technology companies, chipmakers and AI developers increasingly invest in, lend to and buy from one another. The agency warned that such interlinked exposures could weaken together during a downturn.
The Moody's assessment was reported by Reuters correspondent Pragyan Kalita in Bengaluru.
The ratings agency said AI financing needs now extend well beyond data-center construction to land, power, semiconductors, graphics processing units and tensor processing units. Moody's expects capital spending by the five largest US hyperscalers and CoreWeave to approach $1 trillion in 2027, funded through operating cash flows, debt, and structures such as joint ventures and special-purpose vehicles.
The refinancing concern centers on loans coming due between 2027 and 2029, which Moody's said will test the ability of weaker borrowers to refinance at higher interest rates. Moody's noted that about 17% of the 607 borrowers it tracks used payment-in-kind interest, a structure that lets companies defer cash interest payments while adding to their debt load. Reuters separately found earlier this year that loan maturities at US business development companies would peak in 2028 and 2029.
The report also references recent stress in CoreWeave's debt, which has heightened investor concern about highly leveraged AI borrowers. Moody's additionally flagged "circular" financing risk, as technology companies, chipmakers and AI developers increasingly invest in, lend to and buy from one another. The agency warned that such interlinked exposures could weaken together during a downturn.
The Moody's assessment was reported by Reuters correspondent Pragyan Kalita in Bengaluru.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.