JPMorgan: AI-related bond issuance is expected to remain hot in the coming years

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JPMorgan analysts wrote that bond issuances financing AI and data centers may remain hot. JPMorgan states that loans cover an average of 85% of the total project costs, a high ratio that is expected to drive total AI-related spending to $5.5 trillion by 2030, with about $4.1 trillion financed through debt. Debt issuers are expected to utilize "every capital market in every country" to meet their growth financing needs. JPMorgan believes that large tech companies, so-called "super-scale cloud service providers," are sufficiently profitable, so even as debt issuance scales up, investors will remain confident. The bank also speculates that these companies are currently borrowing heavily, partly to retain their large cash reserves in case of future economic deterioration and a significant rise in financing costs.
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