Interview
GS’ Zach Ablon on how hyperscalers are also turning to the high yield markets for financing
- Approximately 18% of year-to-date investment-grade (IG) supply is AI-driven, a figure mirroring the composition of the high-yield market.
- High-yield markets initially held steady despite widening spreads in hyperscaler trading but have recently followed IG market "indigestion."
- 17 of 23 data center joint venture deals are now trading wider than their originated yields.
- Chip financing is projected to carry a lower duration compared to existing IG data center financing.
- The high-yield double-B universe traded at approximately 165 basis points over Treasury yields as of Friday.
- Emerging data center deals trading significantly wider than the double-B benchmark while carrying IG wrappers have raised questions regarding valuation.
- The high-yield spectrum, specifically the double-B universe, is currently characterized by pricing that screens as "very rich."