AI Boom Faces a Higher-Yield Roadblock

Rising borrowing costs near an 8% threshold are temporarily throttling AI data center ABS issuance despite still-massive underlying demand.

• Yields spike: Top-rated data center ABS yielded below 5% in early 2026; similar bonds now yield near 7% as five-year Treasuries rose over 1 point since January.
• 8% is the danger zone: Morgan Stanley's analysis finds issuing these bonds becomes significantly harder once borrowing costs approach 8%, since locked-in lease income can't adjust.

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