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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (48940)	11/17/2025 2:10:25 PM
From: Les H	Read Replies (2) \| Respond to of 50472

Credit Default Swaps spike — some AI firms now riskier than banks before the 2008 crash Story by Piyush Shukla • The market is cautious but not panicking. CDS buying is largely defensive. Investors are hedging, not betting against these firms. Still, the spike signals heightened risk perception. Heavy borrowing makes firms sensitive to interest rate changes, refinancing risks, and project delays. Even large tech companies are not immune. The broader picture shows that AI is not just a technology story, it’s a financial story too. U.S. investment-grade borrowing from AI-focused tech firms reached $75 billion in just September and October, more than double historical averages. Structured financing, off-balance-sheet deals, and complex lending arrangements are increasingly common. This adds another layer of risk. Financial markets are watching closely. CDS spreads act as a barometer for credit stress. A rapid rise could indicate future financial strain if AI investments fail to generate expected cash flows. Investors are balancing the excitement of AI growth with prudence, using swaps to protect themselves while staying exposed to potential gains. The takeaway is clear: AI expansion is driving massive borrowing, and credit markets are adjusting. The spike in CDS shows concern, but it is still measured. Growth, debt management, and investor hedging will determine whether this trend remains under control or escalates into broader financial stress. For now, the market is signaling caution, not panic. AI companies continue to innovate, but their financial strategies are under scrutiny. Credit default swaps provide insight into how investors perceive risk in a rapidly evolving AI landscape. Credit Default Swaps spike — some AI firms now riskier than banks before the 2008 crash Boaz Weinstein’s Saba Capital Management has been selling credit derivatives to lenders seeking protection on major technology companies amid concerns over debt-financed AI investments. The hedge fund has sold CDSs on Oracle, Microsoft, Meta, Amazon and Google parent Alphabet, marking the first time Saba has provided such hedging protection on some of these companies. It’s also reportedly the first time banks have requested this type of trade from the fund. Saba Capital sells credit derivatives to banks hedging tech AI debt - Reuters By Investing.com