Pimco's Stracke Says AI-Related Financing in Early Innings

Pimco President Christian Stracke discusses the early-stage wave of AI-related digital infrastructure financing, highlighting opportunities in lending to data centers and chips. He sees recent spread widening as an entry point, emphasizes selectivity and credit underwriting discipline, and points to attractive yields in both investment-grade-like digital infrastructure debt and single B leveraged loans. Stracke also notes hyperscaler credit strength and a broader capex-driven rise in real rates that benefits fixed-income investors. - AI digital infrastructure financing is in early innings with large-scale lending needs. - Credit spread widening in the space is viewed as an opportunity, not a market push-back. - Digital infrastructure lending can offer 7-9% yields with investment-grade-like quality if underwritten carefully. - Concentration and disruption risks require measured deployment and granular credit analysis. - Hyperscalers (Google, Microsoft, Meta) have very low debt relative to enterprise value, supporting their credit attractiveness. - Single B leveraged loans now yield 8-12%, offering a liquid diversification play with attractive risk-adjusted returns. - A broader capex wave is driving up real rates and fixed-income returns across markets. - Dispersion among asset managers is widening due to the need for large-scale deployment capabilities.