Trading volumes for default insurance on the 10 largest AI chipmakers and hyperscalers grew 691% year-on-year to $140 billion through September. This surge comes as firms have borrowed more than $450 billion this year to finance data centers and chips. While some analysts argue the spike reflects banks hedging their exposure rather than true insolvency—noting Meta holds roughly $82 billion in cash—others point to the 24% implied default probability for Oracle's debt as a sign of systemic fragility.
Monday, October 26, 2026
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Meta Credit Risk Hits All Time High on AI Debt Concerns
US Markets4 days ago
Investors are driving the cost of insuring Meta's debt to record levels as plans to accelerate capital spending heighten fears of an AI debt bubble. A gauge of Meta's 5-year credit default swaps reached an all-time high of 114.5 basis points on Thursday, while its shares sank 5% and corporate bonds declined following third-quarter results. Oracle's credit risk also spiked, with 5-year CDS hitting 343 basis points, a level that exceeds the company's peak during the 2008 financial crisis.
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