Moody’s Ratings reports that massive borrowing for AI infrastructure is expanding private credit beyond traditional boundaries. Capital expenditures by the five largest US hyperscalers and CoreWeave are projected to hit nearly $1 trillion by 2027.
The agency identified a significant wave of loan maturities occurring between 2027 and 2029. With interest rates remaining high, weaker borrowers may face difficulties refinancing their debt obligations.
Data shows that 17% of the 607 tracked borrowers utilize payment-in-kind interest structures, which increase total debt balances over time. Additionally, a record $1.56 trillion in US corporate bonds is set to mature between 2027 and 2031.
Moody’s highlighted risks from circular financing, where tech companies and AI developers are deeply interconnected through mutual investments and lending. Such ties could exacerbate financial instability during economic downturns.
Investors are advised to monitor the debt performance of companies like CoreWeave and the transparency of special-purpose vehicles. These entities can obscure borrowing levels by keeping debt off the parent company's balance sheet.
