Jon Stapleton has Professional Pensions pointing over the Christmas period to this lengthy article in the FT. I’ve been digesting the article as he had, not least for the final paragraphs The article points out that $120bn of debt doesn’t sit on big-tech’s balance sheets but on those of SPVs set up to front debt raising and keep it off the Tech Group’s balance sheet.. A special purpose vehicle (SPV) is a subsidiary company that’s formed to undertake a specific business purpose or activity

So if not the tech companies raising money who? The answer arrives at the end of the long article.

A number of tech bankers said they had even seen securitisation deals on AI debt in recent months, where lenders pool loans and sell slices of them, known as asset-backed securities, to investors. Two bankers estimated these deals numbered in the single-digit billions of dollars.

These deals spread the risk of the data centre loans to a much wider pool of investors, including asset managers and pension funds. Matthew Mish, UBS’s head of public and private credit strategy, said most investors “feel that actually it’s a good thing you ultimately end up with hyperscaler risk” given these companies’ strong balance sheets and credit profiles.

But Mish added SPV financings still “add outstanding liabilities” for tech companies, meaning the “overall credit quality for the hyperscaler would be worse than what’s currently being modelled”.

I suspect he’s picked up what I’m worried about and that the American bond markets are looking more and more like what we saw in the years leading up to the financial crisis of 2008/9. Capital is being raised, this time for the data centres to fulfil AI ambitions and the capital is coming from somewhere

Private capital investors are keen to get in on the AI boom, boosting demand for these novel structures. Tech companies had borrowed about $450bn from private funds as of early 2025, $100bn more than over the previous 12 months, according to UBS.

And what are these private funds?

A number of tech bankers said they had even seen securitisation deals on AI debt in recent months, where lenders pool loans and sell slices of them, known as asset-backed securities, to investors. Two bankers estimated these deals numbered in the single-digit billions of dollars. These deals spread the risk of the data centre loans to a much wider pool of investors, including asset managers and pension funds.

The bold is mine.

There are two worries that preoccupy and they both are about ordinary people getting caught up in extraordinary finance.

The first is the retail customer. The recent articles that have appeared on this blog about “retailisation” of private stem from discussions with Naomi Rovnik, Ludovic Phalippou and most recently this  sound familiar?  To put it simply, the cascade of risky credit ends with the retail holder of packaged debt which looks good, smells good but is explosive as it was in the Financial Crisis.

The second is that capital is being acquired by a small group of private capital specialists in the US who are buying into and buying out UK pension funds in exchange for bonds that look more and more esoteric. If these are the pension funds mentioned below, the PRA should be worried, if this is what funded reinsurance is exposing UK pensioners to, we should be  worried indeed.

The numbers needed to fund AI are huge and if you’ve read this far, here is the free share of the article from the FT. If you find it’s run out, mail me at henry@agewage.com.

Have a good new year and be careful about these SPVs in your or your pension’s private credit portfolio.