AI companies and their backers issued $450 billion in debt over the past year to help finance the industry’s infrastructure boom, more than double the amount issued the previous year and enough to prompt a new warning from the Bank of England.
The central bank said that the surge in borrowing is exposing a wider swath of financial markets to the fortunes of AI. Global AI-related debt sales over the past year exceeded the amount of bonds the British government is expected to sell this year.
“The rapid increase in artificial intelligence-related debt issuance broadens the exposure of capital markets to developments in AI,” according to BoE’s Financial Policy Committee.
That matters because much of the AI boom has been driven by enormous spending on data centers, chips and power infrastructure. As more of that expansion is financed with debt, a disappointment in AI growth could affect lenders and bond investors as well as technology stocks.
BoE said the “risk of a sharper correction persists,” particularly if investors become less optimistic about how quickly AI develops or is adopted. If anticipated AI-driven productivity gains also fail to materialize, the effects could extend beyond AI-related assets to government bond markets, according to its report.
The financial system has remained resilient so far, according to the central bank.
The warning comes as financial institutions themselves become more concerned about AI. In a separate Bank of England survey, 37% of respondents cited AI among the most difficult risks to manage – up 26 percentage points from the previous survey.
The survey included banks, asset managers, hedge funds, insurers, pension funds and large companies.