Investors favor safer data center projects as AI debt piles up

The AI data center boom has run on borrowed money. Now the lenders are getting picky about who they lend to. Investors are pulling support from riskier data center projects and moving toward safer bets backed by major cloud providers. The result is a tighter credit environment. Lenders want higher yields and stricter terms. Developers without blue-chip tenants are finding the welcome mat has been quietly rolled up. The numbers behind the nerves AI-related debt issuance reached nearly $500 billion by August 2026. That figure accounts for about 20% of higher-rated US corporate bond issuance. In 2024, the share was 1%. That is a twentyfold jump in AI’s slice of the high-quality bond market in roughly two years. Morgan Stanley anticipates approximately $3 trillion in AI infrastructure spending through 2028, with half of it financed through debt. JPMorgan goes further, estimating $4.1 trillion in AI-related debt by 2030. Yields tell the story A Meta-backed data center project in El Paso priced with a yield of 7.53% in July 2026. An earlier deal involving Meta and Blue Owl carried a yield of 6.58%. Same type of project, same blue-chip name attached, and investors still wanted almost a fu...