The Era of Equity is Over; The Era of Debt Has Begun
For the past decade, the technology sector has been synonymous with equity-funded growth. That paradigm has shifted. As we close 2025, the narrative is no longer about software margins but about the tangible, capital-intensive reality of infrastructure. The bill for the artificial intelligence revolution is coming due, and it is being paid with credit.
Latest market data indicates that the global build-out of data centers and power grids required for AI will cost nearly $5 trillion over the next five years. While equity grabs the headlines, debt is quietly financing the steel, concrete, and copper essential to this expansion. This massive capital expenditure (CapEx) wave is reshaping borrower profiles across the market, creating veritable debt hotspots that demand careful scrutiny.
The Scale of the Spend
The numbers are staggering. Recent reports from [investmentnews.com](https://www.investmentnews.com/equities/ais-5t-data-center-boom-will-dip-into-every-debt-market-jpmorgan-says/262970) indicate that investment-grade bonds alone will need to supply $1.5 trillion to satisfy the ambitions of AI hyperscalers. We are seeing this play out in real-time, with Meta securing $30 billion in financing and Oracle issuing $18 billion to fund campus expansions.
However, this spending spree is not without consequence. The market is beginning to price in the risk of over-leverage. Oracle’s credit default swaps (CDS)—insurance against a company defaulting—recently spiked to their highest levels since 2009, as reported by [bnnbloomberg.ca](https://www.bnnbloomberg.ca/business/artificial-intelligence/2025/12/12/five-debt-hotspots-in-the-ai-data-centre-boom/). This “widening of spreads” signals that public markets are becoming wary of the sheer volume of debt required to sustain this boom.
Complex Structures and “Shadow” Liabilities
As public market appetite wavers, borrowers are turning to increasingly complex financial engineering. Major tech firms are utilizing “synthetic leases” and off-balance-sheet vehicles to obscure their financial exposure. According to [nytimes.com](https://www.nytimes.com/2025/12/15/technology/ai-risks-debt.html), companies are offloading risk onto smaller satellite firms and upstarts, creating a web of circular deals that reduces transparency.
Furthermore, the Asset-Backed Securities (ABS) market is being tapped aggressively, with forecasts suggesting data center securitizations could reach $110 billion next year, according to [english.elpais.com](https://english.elpais.com/economy-and-business/2025-11-22/techs-ai-debt-surge-cools-market-fever.html). While this floods the system with liquidity, it raises concerns about a potential “glut” if the projected demand for computing power does not materialize on schedule, a risk highlighted by [fortune.com](https://fortune.com/2025/12/12/ai-data-center-boom-sparks-fears-of-glut-amid-lending-frenzy/).
The Bond Capital Perspective
What does this mean for the prudent investor and the mid-market borrower? When liquidity is abundant, complexity increases. We are seeing a market environment characterized by high volatility and opaque deal structures—classic signs of a sector overheating.
The Angle: The physical build-out of AI requires massive capital. While public markets rely on financial engineering to mask leverage, Bond Capital focuses on the asset integrity itself. We understand complex CapEx needs, but we reject the opacity of synthetic structuring. In an environment where major players are hiding risk off-balance sheet, our strategy remains rooted in the fundamentals: lending against the tangible value of the infrastructure—the steel and concrete—rather than the hype of the software.
For business owners in the supply chain of this infrastructure boom, access to traditional bank capital may tighten as lenders struggle to untangle these complex risks. Private credit, offering transparency and certainty of execution, becomes the requisite tool for navigating this volatility.
