As the world grapples with how AI will shape and change our lives going forward from the mundane, like automated homes or more clever apps, to more existential threats (opportunities?) leading to job and possibly sector obsolescence and related, broader social implications, it’s definitely well accepted that the demand for AI computing power is enormous and growing.

Estimates vary, but they are all astronomical, ranging from $5 trillion to $7 trillion in capital investment needed to fund the global data centre and AI buildout, including adding 122 GW of power capacity between now and 2030 (according to JP Morgan). This scale of investment will require involvement from virtually all sources of funding, including public capital markets, private credit, governments and asset-backed securitisation funding.

While not nearly on the same scale as investment grade markets, high yield markets have been playing, and will continue to play, a role in this buildout financing mostly via the funding of data centres. This has important implications for the asset class. In very short order, AI related and data centre issuance has exploded from effectively nothing just over a year ago to nearly $40 billion today, with close to $30 billion issued since the start of the year.

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