Anthropic · U.S. Treasury · JPMorgan · CNBC Technology
Debt-hungry AI companies face increased risk as bond yields spike
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With Treasury yields climbing this week to their highest levels since 2007, companies reliant on debt are poised to see their borrowing costs rise.
Key facts
- Muse clocked more than 2.5 million global downloads in its first two weeks, passing ChatGPT at the top of Apple's App Store, and Evercore's Mark Mahaney told CNBC this week that it could reach 100
- Meanwhile, Japan's SoftBank, a principal provider of capital for AI projects, raised $11.1 billion in a junk-bond sale this week, with yields as high as 9.75% for the 7-year tranche
- Instead of a roster of 50 neoclouds, there's probably 20 that the market's truly interested in," Thompson said
- The equation is even simpler for Bernie Margulies, CEO of American Compute, which advises on risk management for GPU financing
Summary
JPMorgan Chase estimated in June that $4.1 trillion in AI-related debt will be issued through 2030, as data center companies and others tied to the artificial intelligence boom race to build up capacity to meet what many industry experts view as insatiable demand for AI services. As borrowers go back to the market, they're now looking at a 10-year Treasury yield that sits near 5.17%, up about 1 percentage point since the start of the year, meaning companies issuing debt are going to have to offer more attractive rates of return to lure investors. The market isn't in panic mode, at least not yet. Meanwhile, Japan's SoftBank, a principal provider of capital for AI projects, raised $11.1 billion in a junk-bond sale this week, with yields as high as 9.75% for the 7-year tranche.