News Digest: AI Borrowing Is Reshaping Private Credit, but Refinancing Risks Loom, Moody’s Says
October 30, 2026
The rush to finance artificial intelligence infrastructure is pushing private credit well beyond its traditional corporate lending base, but a coming wave of loan maturities could leave weaker borrowers struggling to refinance, Moody’s Ratings said on Tuesday, according to Reuters.
The agency said AI funding needs now stretch far beyond data center construction. They include land, power, semiconductors, graphics processing units and tensor processing units. Moody’s expects capital spending by the five largest US hyperscalers and CoreWeave to approach $1 trillion in 2027. That spending will be financed through a mix of cash flows, debt and structures such as joint ventures and special-purpose vehicles.
The concern is timing. Loans falling due between 2027 and 2029 will test how well weaker borrowers can refinance at higher interest rates. A Reuters analysis earlier this year found that maturities at US business development companies would peak in 2028 and 2029.
Moody’s also pointed to signs of strain in how some borrowers are managing costs. About 17% of the 607 borrowers it tracks use payment-in-kind interest, which lets companies defer cash interest payments but adds to their overall debt burden.
Moody’s further flagged the risk of “circular” financing. Technology companies, chipmakers and AI developers increasingly invest in, lend to and buy from one another. That web of relationships raises the possibility that correlated exposures could weaken together in a downturn, amplifying losses across the sector.
The report adds to a widening debate over whether the AI buildout can be sustained by debt. While spending shows little sign of slowing, the agency’s message is that the cost and availability of refinancing will increasingly separate stronger borrowers from weaker ones as the maturity wall approaches.
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