JPMorgan, Morgan Stanley sell AI data center debt at discounts to avoid limits
Major banks like JPMorgan, Morgan Stanley, SMBC and MUFG are offloading AI-related data center loans they previously underwrote, according to the Financial Times and Bloomberg. These deals involve shifting riskier portions of loans to outside investors, as lenders hit internal exposure caps. A $38 billion Oracle-linked debt package tied to Texas and Wisconsin data centers has taken over six…
Key points
- JPMorgan, Morgan Stanley, SMBC, and MUFG are selling AI data center debt at discounts due to internal lending limits
- $38B Oracle-linked debt package took six months to distribute, signaling market skepticism of AI infrastructure financing
- Oracle’s credit default swaps hit 151 basis points, and S&P downgraded its rating to BBB- amid $40B+ funding needs
Oracle’s credit risk has surged, with five-year credit default swaps rising to 151 basis points—levels last seen in 2009—and its rating downgraded to BBB- by S&P. The company is seeking over $40 billion more in debt and equity this fiscal year, amid shrinking bond demand. Meanwhile, bond yields for AI firms like Meta and Oracle now trade at premiums, and order books have shrunk from five times oversubscription in February to under two times by July. Rising Treasury yields (5.304% in October) and inflation pressures further tighten financing conditions, forcing banks to divest AI-linked debt to avoid overconcentration risk.
The story so far
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Banks are now trying to offload the AI data center debt they just underwrote
startupfortune.com · 10 October 2026
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