Global finance watchdog warns over private credit industry fuelling AI boom

The Financial Stability Board (FSB) warns that the private credit industry's role in funding the AI boom could backfire, leading to sizable losses if a sharp correction occurs. AI companies increasingly rely on private lenders for data centre infrastructure, accounting for over a third of private credit deals in 2025. The report highlights risks from asset valuation corrections, electricity shortages, and oversupply of data centres. Traditional banks are also exposed through direct lending and partnerships, while recent bankruptcies of private credit-backed firms raise transparency concerns.