What is AI data center financing?

It refers to how companies fund compute and power capacity for AI. Many now use leases, project finance and joint ventures, shifting obligations outside core debt. The goal is to secure long-term capacity while preserving headline leverage and ratings. Investors should still assess cash flow coverage and contract terms.

Why are firms using off-balance-sheet debt for AI infrastructure?

These structures can lower reported leverage, share risk with operators and utilities, and match funding to asset lives. They also free room for other borrowing. However, take-or-pay commitments and service contracts remain real obligations. Investors should evaluate transparency, termination rights, and how liabilities are disclosed in footnotes.

How could record 2026 investment-grade bond sales affect UK portfolios?

A busier calendar usually brings wider spreads and better new issue concessions, especially on longer maturities. Sterling tranches may rise as issuers diversify funding. We would keep dry powder for primary deals, favour higher-quality credits, and be selective on hybrids or long tenors unless pricing compensates for added risk.

What are the key risks to watch around AI capex and financing?

Power availability, planning delays, and energy-cost swings can hit returns. Documentation risk is real if leases and PPAs have weak protections. If supply floods markets, funding may shift to hybrids or equity. A slowdown in AI capex would also change demand timing and pressure highly geared projects.

Global Market Insights

December 24: AI Data Center Debt Shift Fuels Record IG Issuance

ByHuzaifa Zahoor December 25, 2025December 25, 2025

AI data center financing is reshaping corporate balance sheets and bond supply. Tech groups have shifted about $120bn (c. £95bn) to structures outside core debt, while strategists flag record 2026 investment-grade bond sales as AI expansion, refinancing and M&A gather pace. For UK investors, the mix of higher capex, heavy issuance and off-balance-sheet debt raises clear questions on spreads, sector risk, and where to position across sterling credit and equities. We break down the mechanisms, the supply outlook, and practical steps for portfolios.