A Revolution in Credit Markets

Watch on YouTube ↗  |  January 08, 2026 at 18:03  |  11:43  |  Morgan Stanley
Speakers
Dan Toscano — Chairman of Markets in Private Equity, Morgan Stanley

Summary

Morgan Stanley's Vishy Tirupattur and Dan Toscano discuss the evolution of credit markets, including the withdrawal of leverage lending guidelines and the blurring of public and private credit. Dan argues that private credit 2.0 will be driven by the massive digital infrastructure and AI buildout, especially power and data centers. He also warns that credit problems will emerge in 2026 as 2025 data center financings season, with potential market overreaction.

  • Credit markets have evolved from junk bonds to high yield, syndicated loans, CLOs, and private credit.
  • Leverage lending guidelines capped leverage at six times and helped spur private credit growth.
  • Their withdrawal frees banks to participate across public and private credit, continuing the blurring of market lines.
  • Private credit 2.0 is focused on digital infrastructure and the AI buildout.
  • Trillions in capital are needed for data centers and power generation.
  • Dan worries 2026 will bring the first credit problems as 2025 data center financings season.
  • Project delays, cost overruns, and labor shortages could cause market overreaction.
  • Money is expected to find good projects despite huge capital demand.
Ideas
Dan Toscano Chairman of Markets in Private Equity, Morgan Stanley 6:11
Digital infrastructure buildout drives private credit 2.0
Private credit's next phase, private credit 2.0, is being driven by the massive capital needs of the digital infrastructure buildup. Dan sees trillions of dollars required for data centers and power generation to support compute demand; this is the backbone of the next industrial revolution and a major opportunity for private credit and related digital infrastructure investments.
BIZD Digital infrastructure DTCR POWER HIGH
Dan Toscano Chairman of Markets in Private Equity, Morgan Stanley 8:01
Data center credit risks emerge in 2026
Dan warns that credit problems will emerge in 2026 as the 2025 data center capital raises season. The buildout faces risks from labor supply and cost, project delays, cost overruns, and commodities like steel and roofing; because investors have been conditioned to a perfect environment, markets may overreact.
Data Center Credit HIGH
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This Morgan Stanley video, published January 08, 2026, features Dan Toscano discussing BIZD, Digital infrastructure, DTCR, POWER, Data Center Credit. 2 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Dan Toscano  · Tickers: BIZD, Digital infrastructure, DTCR, POWER, Data Center Credit