50% of YTD AI capex funded in private credit
Half of all AI capex financed so far in 2026 has been routed through the private credit market, and that has a measurable cost, according to @BankofAmerica Global Research as of 16 October 2026.
@BankofAmerica compared hyperscaler balance-sheet unsecured bonds against off-balance-sheet debt issued in SPVs backstopped by the same credit risk.
Four transactions YTD across $AVGO, $GOOGL, $META and $ORCL show an average coupon pickup in the private credit market of approximately 100bps for IG-type issuers. Lower-quality issuers would carry a higher premium.
After accounting for funding mix and tax considerations, @BankofAmerica estimates that the true interest cost to hyperscalers has jumped by approximately 40bps YTD relative to their reported on-balance-sheet cost of debt.
At the same time, ROIC for the hyperscaler complex has declined 3.3% YTD.
The ROIC-to-cost-of-debt gap is therefore narrowing from both directions: lower returns and higher true funding costs. @BankofAmerica's framework treats a convergence of ROIC and cost of debt, rather than falling ROIC in isolation, as the key credit risk signal.
This was the pattern that preceded the dotcom bust.
Half of all AI capex financed so far in 2026 has been routed through the private credit market, and that has a measurable cost, according to @BankofAmerica Global Research as of 16 October 2026.
@BankofAmerica compared hyperscaler balance-sheet unsecured bonds against off-balance-sheet debt issued in SPVs backstopped by the same credit risk.
Four transactions YTD across $AVGO, $GOOGL, $META and $ORCL show an average coupon pickup in the private credit market of approximately 100bps for IG-type issuers. Lower-quality issuers would carry a higher premium.
After accounting for funding mix and tax considerations, @BankofAmerica estimates that the true interest cost to hyperscalers has jumped by approximately 40bps YTD relative to their reported on-balance-sheet cost of debt.
At the same time, ROIC for the hyperscaler complex has declined 3.3% YTD.
The ROIC-to-cost-of-debt gap is therefore narrowing from both directions: lower returns and higher true funding costs. @BankofAmerica's framework treats a convergence of ROIC and cost of debt, rather than falling ROIC in isolation, as the key credit risk signal.
This was the pattern that preceded the dotcom bust.