Morgan Stanley said that as borrowing costs rise and potential construction delays are suppressing market activity, the issuance of AI-related leveraged debt is expected to “continue to be sluggish, and the threshold for new transactions will also be higher.” According to the bank's latest report, the amount of AI-related leveraged financing issued in October was only 5 billion US dollars. All of this comes from a single borrower, Volta Infrastructure Holdings Ltd., which raised this capital through term loans, with a pricing yield of over 11%. Morgan Stanley expects that distribution activity in this market will remain limited until the end of the year. The bank's strategist wrote that after the US midterm elections, companies that rely on high-yield bonds and leveraged loans to finance may face more obstacles when obtaining electricity supply and related approvals for new construction projects. This could change the timing and size of these companies' investments. Morgan Stanley said that in order to successfully complete the transaction, the developer may have to pay higher financing costs to compensate the lender for the construction risks; or repay more principal before refinancing; or they must first find tenants with better credit conditions. As investors scrutinize new construction projects more closely, projects supported by tenants with lower credit ratings may be particularly difficult to finance.

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