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Goldman Sachs’ Zach Ablon on the credit risks to watch in the AI buildout

Goldman SachsZach Ablon
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  • Credit Market Scenarios

    • Credit is projected to rally if AI capital expenditure (CapEx) slows and demand for AI-related "picks and shovels" diminishes.
    • Hyperscalers may experience equity rallies while simultaneously tightening credit spreads.
    • While credit can act as a natural, asymmetric hedge, future scenarios exist where credit spreads tighten concurrently with declining stock prices.

  • New Issue Marketplace Data

    • Concessions on new deals are a critical indicator for market digestion:
      • Pre-indigestion levels ranged from 2 to 3 basis points.
      • Recent large-scale hyperscaler deals saw concessions widen to 20 basis points.
    • The market's reaction to upcoming hyperscaler issuances will serve as a key data point for assessing sentiment.