AI Hyperscalers’ Shadow Borrowing Bolsters Private Credit Risks

Investment in AI infrastructure via off-balance sheet debt is increasing the exposure of insurers and private credit funds to hyperscalers, according to officials at the Bank for International Settlements.

“Alongside traditional bonds, hyperscalers have turned to off‑balance sheet arrangements to finance infrastructure expansions, often in partnership with private credit firms,” BIS officials Egemen Eren, Ingomar Krohn and Karamfil Todorov said in a note Monday. “These structures strengthen links between hyperscalers and non‑bank investors.”

The comments add to warnings about the debt frenzy to support the artificial intelligence revolution. With so many lenders lining up to throw cash at assets, the ...