DoubleLine and Oaktree Prepare for AI Credit Bust
In brief
- DoubleLine Capital LP and Oaktree Capital Management are buying debt that can perform well if the artificial intelligence boom turns into a credit bust.
- The market will reach high levels in the coming months or years as technology companies pour trillions of dollars into AI.
- Companies have sold over $155 billion of unsecured bonds globally, already up more than 45% from last year.
- Bloomberg Intelligence estimates that companies will spend around $5 trillion on AI over the next five years, much of which will come from debt, and investors will be watching this trend closely.
Terms in this brief
- AI Credit Bust
- A situation where investments in AI technology lead to financial difficulties or defaults on debts taken by companies to fund their AI projects. This term refers to potential risks in the credit market linked to heavy investment in AI, as tech companies borrow heavily to develop and expand AI capabilities.
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