Via alternativecreditinvestor.com
Sycamore Tree warns AI financing boom brings credit risks
Trey Parker said the AI buildout could expose investors to rating-designation risk as private credit funds data centers.
The trillions of dollars needed to build artificial-intelligence infrastructure could create significant credit risks, including risks tied to private ratings, Sycamore Tree Capital’s Trey Parker said, Bloomberg reported.
Insurance companies have strong demand for private credit, a market that has financed a growing number of AI data centers. Parker said investors face not only credit risk but also rating-designation risk if private scores are revised or challenged by regulators.
The warning comes as data-center developers and technology companies seek more debt to fund servers, power systems, and other infrastructure. Parker said the scale of the capital requirements makes the quality and classification of the debt increasingly important for investors.