HSBC flags selectivity in data center financing as AI debt demand rises

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HSBC on data center financing

Highlights

HSBC CEO Georges Elhedery emphasizes selectivity in AI data center financing, citing tenancy agreement strength and contract pricing as key criteria.
Global data center spending could reach $7 trillion by 2030, driving multibillion-dollar debt-financed expansion amid elevated interest costs.
Hyperscalers raised $200 billion in bond financing last year and may raise $1 trillion in 2024, contributing to bond market pressure alongside rising yields and significant AI-related debt issuance.

Financing criteria for AI infrastructure

As reported by CNBC, HSBC Chief Executive Georges Elhedery says investors and lenders need to be selective when assessing data center opportunities tied to artificial intelligence growth. He says the strength of tenancy agreements and the pricing of contracts are central to deciding which projects can be supported, warning that some deals may prove more challenging than others.

Elhedery describes AI as a transformational technology and says the bank is on a journey to adopt it across its operations. He says the technology can raise productivity and help re-engineer the bank, while HSBC also remains active around the infrastructure supporting AI and cloud computing.

HSBC, headquartered in London, is both a financier and operator of data centers. In its 2025 annual report, the bank says it aims to become the leading bank for fast-growing transition ecosystems, with customers spanning areas including data centers and the AI sector.

Debt markets face mounting pressure

Data center campuses house the servers that power AI and cloud services, and the sector has drawn multibillion-dollar investment in recent years. McKinsey estimates global spending on data centers could reach $7 trillion by 2030, with major technology companies increasingly turning to private credit and debt markets to fund expansion.

That borrowing wave is adding strain to financial markets as companies build already large debt loads while interest costs remain elevated. Earlier this month in London, Allianz chief economic adviser Mohamed El-Erian says competition for financing between governments and AI-linked companies is becoming a source of pressure in bond markets.

El-Erian says hyperscalers raised $200 billion in bond financing last year and may raise $1 trillion this year, making them aggressive borrowers as they bet on long-term AI growth. At the same time, bond yields across several major economies have climbed to multi-decade highs in 2026 amid concerns over government deficits, debt levels, persistent inflation and more hawkish central banks, while JPMorgan Chase estimates $4.1 trillion in AI-related debt will be issued by the end of the decade.

In our earlier article on mounting strains in the U.S. AI data center buildout, we explained that rising financing costs, construction delays and power constraints are undermining confidence in a boom once priced at trillions of dollars. We noted that only a minority of planned projects were seen as credible, with examples of cost overruns and tougher capital raising highlighting how funding conditions and contract economics can make or break new data center developments.

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