TREE NEWS reports: A debt surge to finance AI infrastructure is driving up borrowing costs for developing countries, Bank of America strategists said. Average yields on emerging-market dollar bonds have climbed nearly 1 percentage point in the second half of the year to their highest since April last year. BofA’s Merveille Paja said the move could challenge governments seeking to refinance maturing debt, with geopolitical concerns, high oil prices and rising policy rates already pressuring yields.
AI Debt Boom Pushes Emerging Market Borrowing Costs Higher, BofA Says
AI take
The notable part is the transmission channel: AI capex is no longer just an equity story, it is competing for the same global credit pool that emerging-market sovereigns rely on. If AI-related issuance keeps absorbing demand, the squeeze lands hardest on governments with near-term refinancing needs, which already face geopolitical risk, elevated oil and rising policy rates. Whether this crowding-out persists, or proves a temporary repricing, is the open question — watch the trajectory of EM dollar yields relative to AI-linked issuance.
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