Banks offload AI data center debt they underwrote
The gist
Banks that underwrote AI data center debt are now trying to sell it off.
The retreat matters because AI borrowing has become a financial stability worry.
How it unfolded
- Oct 10, 2026JPMorgan, Morgan Stanley, SMBC and MUFG have been exploring significant risk transfers, deals that let a bank keep a loan on paper while shifting its riskiest slice to outside investors, according to a report from the Financial Times.
- Oct 10, 2026A group of banks including JPMorgan and MUFG has spent more than six months trying to distribute $38 billion in construction debt tied to a Texas and Wisconsin data center project leased to Oracle, Bloomberg has reported; some lenders are now willing to sell pieces of it to non-bank buyers at a discount.
- Oct 11, 2026Oracle's five-year CDS spread hit 203 basis points, an 18-year high, after S&P cut its rating to BBB-, while Meta's latest bond drew a third less investor demand than its sale a year earlier.