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Bond Traders Agonize Over AI Companies’ $70 Billion of Shadow Credit Backstops
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Bonds Bond Traders Are Agonizing Over $70 Billion of Shadow Credit Backstops For AI Companies Even before Nvidia Corp.’s splashy $500 billion financing partnership this week, investors were starting to fret over the roughly $70 billion in phantom liabilities that don’t appear on major AI companies’ balance sheets, but could materialize at the worst possible time. With its latest move, Nvidia is poised to provide potentially tens of billions of dollars of what’s called “residual value”...
Bonds
Bond Traders Are Agonizing Over $70 Billion of Shadow Credit Backstops For AI Companies
Even before Nvidia Corp.’s splashy $500 billion financing partnership this week, investors were starting to fret over the roughly $70 billion in phantom liabilities that don’t appear on major AI companies’ balance sheets, but could materialize at the worst possible time.
With its latest move, Nvidia is poised to provide potentially tens of billions of dollars of what’s called “residual value” support for debt deals tied to the artificial intelligence build out — effectively letting firms rely on its strong credit rating in a bid to contain customer costs.