Moody's Warns AI Private Credit Boom Masks Refinancing Time Bomb as Hyperscaler Capex Nears $1 Trillion

Moody's Ratings warned on Tuesday that the AI boom has created new opportunities for private credit lenders while increasing risks, citing rising industry financing needs and growing interconnectedness among technology companies. AI infrastructure spending has expanded beyond data centers to land, power procurement, semiconductors and specialized chips including GPUs and TPUs, Moody's said. The agency estimates combined capital expenditures by the five largest U.S. hyperscalers and CoreWeave (CRWV-US) could approach $1 trillion in 2027, funded through internal cash flow, borrowing, joint ventures and special purpose vehicles. Moody's cautioned that a large volume of loans matures between 2027 and 2029, and weaker borrowers may struggle to refinance if rates stay elevated. About 17% of the 607 borrowers Moody's tracks use payment-in-kind interest, which preserves cash short-term but raises long-term debt burdens. A Reuters analysis earlier in 2026 found U.S. business development company debt maturities peaking in 2028 and 2029. Moody's also flagged "circular" financing, in which companies invest in, lend to and buy from one another, potentially amplifying losses in a downturn.