Morgan Stanley strategists predict that spreads on asset‑backed securities (ABS) financing data‑center projects will continue to widen as firms race to fund AI initiatives. In an Oct. 22 note, James Egan and Carolyn Campbell note AAA data‑center spreads around 200 basis points appear attractive, yet investor consensus expects further widening across the capital stack, albeit at a slower pace. Investors are demanding higher compensation, focusing on sponsor risk and seeking amortizing structures.
Growing interest also exists in GPU‑backed ABS, which are expected to be shorter‑dated, fully amortizing, and offer additional spread. Analysts anticipate a GPU‑loan ABS deal would be well‑received, with spreads still tied to contract strength and counterparty risk. Meanwhile, loan‑market volatility is boosting new‑issue CLO equity opportunities, and eight U.S. ABS deals are slated to price this week, including offerings from Enterprise and Accelerated Assets, with Moody’s reporting upcoming transactions such as U.S. Signal’s co‑location data‑center deal and Truist’s marine and RV credit‑linked notes.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing