While equity investors look to sunny futures, creditors are scrutinising liabilities like data centre leases
AT TIMES, creditors can feel like they are the only adults in the room. As artificial intelligence-driven exuberance drives stock markets higher, bond vigilantes are pushing Treasury rates higher, while credit markets are repricing data centre-related debt lower.
While equity analysts might get paid for dreamy earnings forecasts, the best creditors can hope for is repayment at par if a bond is held to maturity.
So they look at the details where, as ever, devils reside. For example, while the debt being taken on by hyperscalers to build out AI infrastructure is getting lots of attention and is even being blamed for crowding out Treasury bonds, creditors have taken this a step further in typically geeky fashion, scrutinising off-balance-sheet obligations such as leases.