Ai-linked borrowing lifts low-rated US firms' debt to $88 billion
Ai-related issuance by low-rated firms has reached $88 billion this year, concentrating risk in junk bonds and leveraged loans as investors push into lower-quality credits. Lenders and CLO managers are scrutinizing revenue projections, collateral and debt capacity, and buyers favor double-B-rated issuers and data center projects. Yields have risen sharply, with BB+ borrowers paying about 9%–10% and lower-rated names facing 14%–15% rates; a recent data center deal priced below par and later fell further. The shift raises funding costs for speculative ai projects and could constrain smaller or unproven borrowers.
Investors demand higher yields for ai-linked low-rated debt.
Context
Issuance of ai-linked debt has climbed this year. Investors are reacting to unproven…
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