PremiumRebalancing The Odds: Here's What Wall Street Won't Tell You About 'AI Credit'
AI infrastructure is being sold as the railroad of the 21st century - an epoch-defining build-out that will reshape the economy. History suggests the technology may deliver. The capital providers financing it with debt, however, rarely do.
In this must-read report (available here or pro subs), Andromeda Capital Management lays out why the current AI credit cycle looks less like a free lunch and more like a classic "heads I win, tails you lose" setup. Credit investors are locking in record-tight spreads, accepting capped upside and uncertain returns on capital, while equity holders retain the convex payoff. Private credit—now heavily concentrated in technology and SaaS—has ballooned into a multi-trillion-dollar market that keeps leverage off public balance sheets, yet the risks are migrating toward life insurers, PE-owned vehicles, and circular financing structures that echo pre-GFC complexity.