RiverSong

🦔Bloomberg talked to more than 30 bankers and money managers who finance AI data centers, and all of them said raising money has gotten much harder in just a few months. At least 18 data center deals now have to pay lenders more than 10% a year. The cost of insuring Oracle, SpaceX and Meta debt against default hit records last week. My Take For two years the hard limit on AI was physical, mostly power and grid connections. Now money is short too. Banks are close to the most they’ll lend to this sector, and some insurers that take on part of the risk say they’re already full. Some tenants can walk away if a data center opens 90 to 180 days late, and Oracle already filed a force majeure notice to put off payments on a delayed site in New Mexico. Lenders thought a big tech tenant guaranteed the payments, and in some deals a construction delay is enough to undo that. The biggest tech companies will still get loans because lenders trust their balance sheets. The smaller GPU rental companies won’t. Expect more AI firms to sell stock for cash instead, which shrinks every existing shareholder’s slice. Chipmakers that promised to back their customers’ debt take on more of the risk, and Nvidia’s default insurance hit a record too. New deals at these higher rates also push down the price of older AI bonds, which bond funds and insurers hold for a lot of people’s retirement. Hedgie🤗