"Morgan Stanley, one of the key players in financing the artificial-intelligence race, is considering offloading some of its data-center exposure via a so-called significant risk transfer. The bank has held preliminary talks with potential investors about an SRT tied to a portfolio of loans to businesses involved in AI infrastructure, according to people with knowledge of the matter, who asked not to be identified because the information is confidential."
"SRTs backed by data-center exposure are still a nascent slice of the credit-risk transfer market, where banks hedge their credit exposure, manage capital ratios and free up balance-sheet capacity for more lending by selling credit-linked notes to institutional investors. Morgan Stanley is also exploring other ways to hedge or syndicate part of its data-center risk, the people said, and there is no guarantee the early-stage SRT talks will result in a deal."
"Morgan Stanley in October arranged over $27 billion of debt and about $2.5 billion of equity financing for a special-purpose vehicle tied to the development of Meta Platforms Inc.'s Hyperion data-center site in Richland Parish, Louisiana. The bank also led three recent junk-bond offerings from TeraWulf Inc., Cipher Mining Inc., and Applied Digital Corp. in which the proceeds were earmarked in part to help finance the construction of new data-center facilities."
Morgan Stanley has held preliminary talks with investors about a significant risk transfer tied to loans for companies building AI infrastructure and is exploring other hedging or syndication options without any guarantee of a deal. SRTs backed by data-center exposure remain a nascent segment of the credit-risk transfer market that banks use to hedge credit, manage capital ratios and free balance-sheet capacity by selling credit-linked notes to institutional investors. The bank arranged over $27 billion of debt and about $2.5 billion of equity financing for an SPV tied to Meta Platforms' Hyperion data-center and led junk-bond offerings for firms financing new facilities. Morgan Stanley forecasts roughly $3 trillion in data-center infrastructure spending through 2028, with cash flow covering about half and debt funding most of the remainder, creating potential overexposure risks for lenders.
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