Goldman's global head of leveraged finance on AI infrastructure (with Dani Burger)

Asks if AI-related issuance is just an initial wave or the dominant theme going forward.

Dani Burger

Miriam Wheeler

Number one theme is hard assets and infrastructure buildout. AI capex is a generational opportunity. US will need double the power for data centers over next couple of years. Hyperscalers will spend $600 billion this year alone on AI capex. 20% of high yield issuance is AI-related and that will continue.

It's data centers, chip finance, and power. That's absolutely what investors want to focus on.

Asks how the market is treating the risk of unknown outcomes in 5 years.

Dani Burger

Miriam Wheeler

Natural checks exist: land availability, power availability, long lead times. Market will start differentiating based on track record and ability to deliver large projects on time and on budget. Backdrop will continue to be strong.

As we get more data, the market will start distinguishing more between projects.

Asks what fuels differentiation and whether the market is in a frenzy.

Dani Burger

Miriam Wheeler

It's nuanced - lease structures, tenant credit quality, project location, lease length matter. Market is differentiating. Clean credit stories have traded up, while software and inflation-sensitive sectors have traded down. Not a lot of supply coming, so good new money names see strong demand.

It's very much a project finance type of backdrop.

Asks about backlog vs new activity and sponsor activity.

Dani Burger

Miriam Wheeler

Q1 was big for M&A, up 25% but concentrated. Sponsor backlog is relatively light as many deals were financed in IG market. Positive for technicals. Longer term optimistic sponsor activity returns. AI buildout may bring sponsors back, with activity in healthcare and industrials.

A lot of capital on the sidelines, DPI pressure remains front of mind.

Asks about crowding out from AI and the rest of the market.

Dani Burger

Miriam Wheeler

Muted activity around software for a period of time due to wide bid-ask spreads. Activity expected around staples, healthcare. Europe getting more active for first time in a while. Software market has stabilized around certain names but not toxic.

You may not see big transaction activity until that gap between buyers and sellers gets closer together.

Asks about tight credit spreads despite inflation and war - is it complacency or fundamentals?

Dani Burger

Miriam Wheeler

Market is bifurcating. Total credit spreads have retraced to near all-time tights from 2007, but under the hood the market is differentiating. Clean credit stories traded up, software and war-sensitive sectors traded down. Not a lot of supply, so good new money names see strong demand.

Q1 earnings were strong across the board. The economy has been able to absorb a lot of these inflation considerations. That's part of why rates are higher - growth has continued to be strong.

Asks if sensitive sectors could lead to greater credit market ruptures.

Dani Burger

Miriam Wheeler

Haven't seen that so far. Q1 earnings were strong across the board. Economy has been able to absorb inflation considerations. Don't see anything systemic at this point.

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