Banks Are Dumping the AI Data Center Debt They Just Underwrote
Banks are now trying to offload the AI data center debt they just underwrote
JPMorgan, Morgan Stanley, SMBC, and MUFG are quietly offloading pieces of the AI debt they helped create, using significant risk transfers to shed exposure as they hit internal limits. A $38 billion Oracle-leased data center loan has been stuck for over six months, and Oracle's credit default swaps have spiked to 2009 levels. The AI boom's assumption of endless cheap credit is being tested.
Banks do not sell down debt they are confident in. They sell down debt when they are worried about concentration, which is exactly what "approaching internal limits" means in plain English: too much of this bank's balance sheet is now one bet on one sector holding up.