AI financing drives private credit growth as refinancing risks rise, Moody’s says
XLF•Moody’s Ratings said borrowing for AI infrastructure is expanding private credit, while loans coming due from 2027 to 2029 could leave weaker borrowers struggling to refinance. It expects spending by five major U.S. hyperscalers and CoreWeave to reach nearly $1 trillion in 2027.
1. AI expands financing needs
Moody’s Ratings said AI financing needs now extend beyond data-center construction to land, power, semiconductors, graphics processing units and tensor processing units. Capital spending by the five largest U.S. hyperscalers and CoreWeave is expected to reach nearly $1 trillion in 2027, financed through cash flows, debt, joint ventures and special-purpose vehicles.
2. Refinancing risks build
Loans coming due between 2027 and 2029 will test weaker borrowers’ ability to refinance at higher interest rates, Moody’s said. About 17% of the 607 borrowers it tracks used payment-in-kind interest, which defers cash interest payments but adds to debt. Moody’s also flagged circular financing among technology companies, chipmakers and AI developers, whose investments, lending and purchases from one another could create correlated exposures in a downturn.
