Asian banks are aggressively financing the AI infrastructure boom, leading to record-breaking debt levels. In Taiwan, lenders issued a record TWD 4 trillion, or approximately $126 billion, in loans during the first seven months of 2026. A significant portion of these funds supports the AI supply chain, with working capital loans for firms linked to TSMC, Nvidia, and Microsoft growing nearly eight times faster than mortgage lending.
The trend extends across the Asia-Pacific region, where G3 syndicated lending reached $171 billion in the first nine months of 2026, marking a six-year high and a 6% year-over-year increase. Financing for data centers hit $56 billion year-to-date in 2026, compared to $26 billion for the entirety of 2025. The Asian data center debt market reached $15 billion in 2026 alone, a 27% increase from the previous year.
Morgan Stanley reports that debt leverage for hyperscalers rose from 0.9x to 1.8x within six months. Global AI-related debt issuance is projected to reach $570 billion in 2026. As banks prioritize the tech sector, corporate loan rates have climbed by 0.9 percentage points, and credit for non-tech borrowers is being rationed.
Regulators in Japan and Taiwan have increased scrutiny due to concerns over concentration risk. Authorities warn that the financial system is becoming overly exposed to the AI sector. Southeast Asia is considered particularly vulnerable to a potential market downturn, as the reliance on borrowed capital to fund future AI revenue growth increases the risks for both lenders and borrowers.
