Pimco Warns on Data Center Junk Debt as Market Share Climbs From 4% to 10%

1 articles · Updated · Bloomberg · May 28

David Forgash said investors should be cautious on high-yield debt backing data centers, where a fast issuance boom is already splitting the market into likely winners and losers.
4% of the high-yield market is now tied to data centers, he said, up from effectively zero a year ago and projected to reach 10% within two years.
Some recent deals have already triggered investor nervousness, suggesting credit quality and business prospects are starting to diverge across issuers.
The warning points to a broader risk in one of leveraged finance's fastest-growing niches: rapid expansion may outpace investors' ability to distinguish durable operators from weaker borrowers.

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