Key Takeaways
- • Moody's Ratings said on Tuesday, October 27, 2026, that heavy borrowing to fund AI infrastructure is expanding private credit beyond traditional corporate lending, according to Reuters.
- • 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.
- • A wave of loans maturing between 2027 and 2029 will test weaker borrowers' ability to refinance at higher interest rates, Moody's said.
- • About 17% of the 607 borrowers tracked by Moody's use payment-in-kind interest, deferring cash interest and adding to debt burdens.
- • Moody's flagged "circular" financing risks among technology companies, chipmakers and AI developers that could weaken correlated exposures in a downturn.
Summary
Moody's Ratings said on Tuesday that high levels of borrowing to fund artificial intelligence infrastructure are expanding private credit beyond traditional corporate lending, while a concentrated wave of loan maturities could leave weaker borrowers struggling to refinance, according to a Reuters report.
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 reach nearly $1 trillion in 2027. That spending is being financed through operating cash flows, debt and structures such as joint ventures and special-purpose vehicles.
The central near-term concern is refinancing. Moody's said a wave of loans coming due between 2027 and 2029 will test weaker borrowers' ability to refinance at higher interest rates. Reuters previously found that loan maturities at US business development companies would peak in 2028 and 2029. Moody's also noted that about 17% of the 607 borrowers it tracks use payment-in-kind interest, which allows companies to defer cash interest payments while increasing their debt burden.
Reuters reported that recent stress in CoreWeave debt has heightened investor concern about highly leveraged AI borrowers. Moody's additionally flagged "circular" financing risks, as technology companies, chipmakers and AI developers increasingly invest in, lend to and buy from one another. The agency warned that this interdependence could cause correlated exposures to weaken together during a downturn.
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 reach nearly $1 trillion in 2027. That spending is being financed through operating cash flows, debt and structures such as joint ventures and special-purpose vehicles.
The central near-term concern is refinancing. Moody's said a wave of loans coming due between 2027 and 2029 will test weaker borrowers' ability to refinance at higher interest rates. Reuters previously found that loan maturities at US business development companies would peak in 2028 and 2029. Moody's also noted that about 17% of the 607 borrowers it tracks use payment-in-kind interest, which allows companies to defer cash interest payments while increasing their debt burden.
Reuters reported that recent stress in CoreWeave debt has heightened investor concern about highly leveraged AI borrowers. Moody's additionally flagged "circular" financing risks, as technology companies, chipmakers and AI developers increasingly invest in, lend to and buy from one another. The agency warned that this interdependence could cause correlated exposures to weaken together during a downturn.
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