AI's $5 trillion data-center boom will dip into every debt market, JPMorgan says

"The furious push by AI hyperscalers to build out data centers will need about $1.5 trillion of investment-grade bonds over the next five years and extensive funding from every other corner of the market, according to an analysis by JPMorgan Chase & Co. The question is not which market will finance the AI-boom?' Rather, the question is how will financings be structured to access every capital market?' according to strategists led by Tarek Hamid."

"Leveraged finance is primed to provide around $150 billion over the next half decade, they said. Even with funding from the investment-grade and high-yield bond markets, as well as up to $40 billion per year in data-center securitizations, it will still be insufficient to meet demand, the strategists added. Private credit and governments could help cover a remaining $1.4 trillion funding gap, the report estimates."

"The bank calculates an at least $5 trillion tab that could climb as high as $7 trillion, singlehandedly driving a reacceleration in growth in the bond and syndicated loan markets, the strategists wrote in a report Monday. The analysts project $300 billion in high-grade bonds going toward AI data centers next year. That could account for nearly one fifth of total issuance in that market, which a report from Barclays Plc estimates will grow to $1.6 trillion."

AI hyperscalers' data-center expansion will require about $1.5 trillion in investment-grade bonds over the next five years and could total $5–7 trillion for infrastructure buildout. Leveraged finance could supply roughly $150 billion over the next half-decade, and data-center securitizations might contribute up to $40 billion per year, but those sources alone will be insufficient. Private credit and government financing may need to cover a remaining roughly $1.4 trillion funding gap. Projections indicate about $300 billion in high-grade bonds could flow into data centers next year, representing nearly one-fifth of that market's issuance. Demand appears constrained mainly by physical limits such as compute resources, real estate, and energy.

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