Moody’s warns of refinancing risks amid AI financing boom

The AI buildout has a bill attached, and Moody’s Ratings would like everyone to remember that bills come due. In findings released Tuesday, the ratings agency said heavy borrowing to fund AI infrastructure is pushing private credit well beyond its traditional corporate lending turf. It also warned that a cluster of loans maturing over the next few years could leave weaker borrowers struggling to refinance. A trillion-dollar appetite The scale of spending is hard to overstate. According to Moody’s, AI-related capital expenditures by the five largest US hyperscalers and CoreWeave are expected to reach nearly $1 trillion by 2027. Moody’s said that spending is being financed through a mix of channels. These include operating cash flows, debt, joint ventures, and special-purpose vehicles. Special-purpose vehicles deserve a quick translation. They are separate legal entities set up to hold specific assets or debt, which can keep borrowing off a parent company’s main balance sheet. Useful tools, but they can make it harder to see who owes what. The maturity wave and the PIK problem The core concern is timing. Moody’s flagged a significant wave of loan maturities expected between 2027 and ...