Morgan Stanley to hedge data center risk: The multinational investment bank Morgan Stanley is considering reducing its exposure to data centers through a significant risk transfer (SRT), Bloomberg reported last week, citing unnamed sources. The bank has begun initial discussions with investors regarding an SRT linked to a set of loans issued to AI infrastructure players.

Why does this matter? The move suggests a growing concern over a possible AI bubble amid a surge in lending to finance a forecasted USD 3 tn investment in AI infrastructure buildouts by 2028, the news outlet said. With half of the projected investments expected to be raised via credit markets, concerns are growing about banks’ increased risk exposure to the small set of companies leading the AI push.

REMEMBER- Morgan Stanley made headlines in AI: Last August, the New York City-based bank arranged financing of some USD 29 bn of debt and equity for Meta’s hyperscaler data center expansion in Louisiana. The bank has also supported three high-risk bond issuances by TeraWulf, Cipher Mining, and Applied Digital to finance data center developments, Bloomberg reported.

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