USD.AI co-founder Conor Moore said Wall Street banks prefer huge AI financing transactions while smaller GPU operators have difficulty obtaining loans. Moore argued that investment-grade deals let banks lend without forming a view about the AI sector's prospects. Lenders financing a Microsoft-backed project can assess Microsoft's repayment capacity rather than the underlying AI business's chances of success.
The volume of AI borrowing is straining investor demand. Major bond investors have company-specific exposure limits, and expanding AI debt issuance is prompting demands for higher yields. Moore illustrated investor fatigue with a hypothetical investor unwilling to participate in a 12th Microsoft financing of $40 billion.
Monday's Anthropic financing totals $63 billion. Bank of America, Citigroup and Morgan Stanley are arranging senior loans to finance Broadcom AI chips. Blackstone is supplying junior financing. Several banks weighed withdrawing before Broadcom improved the terms, including safeguards against equipment losing value.
Karen Fang, Bank of America's global head of infrastructure and sustainable finance, said the bank had difficulty syndicating a $14 billion Oracle data center loan in Michigan. Fang told BloombergNEF that Bank of America approached long-term bond investors instead. Fang said strong projects can still obtain capital. Moore said financing pressures are forcing lenders to devise more creative transactions and develop views about the underlying businesses.
USD.AI arranges GPU-backed loans ranging from $20 million to $250 million. Moore expects the average transaction size to increase from roughly $50 million to $100 million. Smaller operators can install GPUs in repurposed telecom buildings or shipping containers and use existing electricity supplies, potentially avoiding long construction delays. However, traditional lenders find loans to smaller operators more difficult to assess. Moore said the market urgently needs standardization. USD.AI seeks to simplify loan evaluation to attract private-credit funds and family offices, followed eventually by regional banks and insurers.
Polymarket traders assigned roughly a 10% probability to an AI industry downturn by December 31. Polymarket traders assigned a 23% probability to a downturn by June 30, 2027. The market's criteria require three major distress events over a 90-day period.
Nvidia also has an interest in making GPU financing more accessible. Nvidia announced partnerships in August intended to mobilize more than $500 billion of third-party funding for AI infrastructure. However, lenders remain worried about GPU depreciation. Financing limits could reduce smaller operators' chip purchases.
Moore said USD.AI gives each transaction a score out of 100 based on the operator, the operator's customers and the contract. Moore said USD.AI rejects transactions scoring below 60. Loan proceeds remain in escrow until the servers have been installed at the data center. Moore said withholding funds until installation reduces transaction risk.
USD.AI Co-Founder Critiques AI Financing Landscape, Highlights Bank Preferences for Large Deals
BenzingaShare
Summary
USD.AI co-founder Conor Moore said Wall Street banks are prioritizing large AI financing deals, making it hard for smaller GPU operators to get loans. Investment-grade deals let banks sidestep evaluating the AI sector's future by relying on major backers like Microsoft. Rising AI borrowing is hurting investor sentiment, with bond investors setting exposure limits and pushing for higher yields. Moore noted an investor refused to fund a 12th $40 billion Microsoft-backed deal. Anthropic recently secured $63 billion in financing, led by Bank of America, Citigroup, and Morgan Stanley. USD.AI offers GPU-backed loans between $20 million and $250 million, and Moore expects the average deal to hit $100 million. Standardization is key to attract private-credit funds and family offices. Among altcoins to watch, USD.AI’s model aims to reduce risk by holding loan funds in escrow until servers are installed. Polymarket traders see a 10% chance of an AI downturn by year-end.
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.