Morgan Stanley invents $40B AI debt class, vaulting past Goldman to No. 2

Morgan Stanley has turned AI infrastructure financing into a new asset class, packaging hyperscaler-backed leases into bonds that mainstream investors can buy — and rewriting Wall Street's competitive order in the process.

Morgan Stanley collected $2.3 billion in debt and equity capital-markets fees in the first half of 2026, up 64 percent from $1.4 billion a year earlier, vaulting the bank past Goldman Sachs to second place globally behind JPMorgan Chase, according to LSEG data. Almost all of the increase traces to a single source: the financing behind the AI infrastructure buildout.

"The dollar amounts that used to be $1 billion, $2 billion, $5 billion are now $10 billion or $20 billion and higher," said Mo Assomull, co-head of investment banking at Morgan Stanley.

The bank's template was a $3.2 billion bond for data-center developer TeraWulf, priced at a 7.75 percent yield and backstopped by a guarantee from Google. Since that deal, Morgan Stanley has sold more than $40 billion of similar "construction bonds" and carried the structure into Asia and Europe, where Mistral raised $830 million in debt to build a Paris data center earlier this year. Bigger deals followed: a $27 billion debt package for Meta's Hyperion data-center venture with Blue Owl and an advisory role on a $35 billion chip-financing deal for Broadcom.

The innovation matters because it widens the pool of capital available for AI infrastructure while tying more of the financial system to continued AI demand. Morgan Stanley estimates the broader buildout will consume some $10 trillion in spending over the coming years, and its leveraged-finance team expects AI infrastructure bonds to become the majority of new non-investment-grade debt issued each year — the first genuinely new segment to appear in that market in two decades.

How Hyperscaler Guarantees Cut Borrowing Costs in Half

The engineering that makes these deals work is the hyperscaler guarantee. When Google, Amazon, Meta or Microsoft backstops the leases on a data center, the cost of borrowing drops by about half, because credit investors are lending against a blue-chip balance sheet rather than an unproven developer. Morgan Stanley layered on project-finance protections — "lockboxes" that ring-fence lease payments for bondholders, plus extra collateral — to reassure insurers, asset managers and pension funds that bought the TeraWulf bonds.

The hyperscalers are leaning on debt because their capital spending is on track to consume nearly all of their operating cash flow this year, leaving bond markets to fund the gap. Morgan Stanley has since pushed the model onto the chips themselves. In March 2026 it priced an $8.5 billion loan for neocloud CoreWeave, backed by a hyperscaler contract, at 2.25 percentage points over the benchmark rate. Two months later it teamed with Japan's MUFG to arrange a $3.1 billion loan — the first GPU financing sold as a broadly syndicated term loan — to buy and install Nvidia chips. That deal drew roughly $20 billion in demand but was backed by two AI labs and priced at 4.5 points over the benchmark.

The gap between those two spreads tells the story. The further a deal sits from a hyperscaler's balance sheet, and the closer it sits to the AI labs actually consuming the compute, the thinner the underlying credit — and the more investors demand to hold it.

Where the Risk Concentrates

That is also where the risk concentrates. The ultimate tenants for much of this capacity are OpenAI and Anthropic, companies burning cash at extraordinary rates even as they raise it just as fast; Anthropic has weighed a raise valuing it at $900 billion. Their financial health underwrites the newest, thinnest layers of AI debt.

"This is a huge capex investment cycle, you don't have parallels to it in history," said Raj Joshi, a senior vice-president at Moody's Ratings. "There is no playbook for this."

Execution risk is real too — OpenAI and Oracle scrapped a planned Stargate expansion in Texas earlier this year — and some rivals are keeping their distance. JPMorgan's finance chief said the bank walked away from data-center deals whose lending terms it found unpalatable. For now, the volume is rewriting Wall Street's income statements. Morgan Stanley reported record second-quarter revenue of $21.35 billion in July, with investment-banking fees up 58 percent year over year.

This article is for informational purposes only and does not constitute investment advice.