Liquidity Pressure, Credit Deterioration and the Emerging Risks of AI Infrastructure Financing
Private credit—the provision of business loans by investment funds and other non-bank lenders—continues to attract scrutiny. The latest evidence suggests that the sector is experiencing sustained liquidity pressure, uneven deterioration in borrower credit quality, and new uncertainties surrounding financing for artificial intelligence infrastructure.
The central question remains: Are we observing isolated financial difficulties, or the early stages of a broader credit-cycle deterioration?
Investor Withdrawals Remain Significant
A November 6 report from Robert A. Stanger & Company provides a clearer picture of investor behavior. Non-listed business development companies (BDCs) experienced $4.1 billion in net investor outflows during the third quarter of 2026, their third consecutive quarter of withdrawals exceeding new investment.
Fundraising declined 87% from a year earlier. Nevertheless, redemption requests moderated from 12.5% to 11.5% of fund value. Managers satisfied approximately 40% of requests, leaving an estimated $8.2 billion outstanding.
This represents continuing liquidity pressure, but not a fresh acceleration in withdrawal demand. The figures concern an important segment of private credit rather than the entire industry. rastanger.com
Borrower Credit Quality: A Mixed Picture
Goldman Sachs BDC reported on November 5 that investments no longer generating recognized interest income increased from 2.9% to 4.2% of portfolio value during the third quarter. Its net asset value declined 3%.
By contrast, Barings BDC reported relatively stable asset valuations and arranged approximately $396 million in loan-backed financing, expected to close in November.
These differences demonstrate why individual fund difficulties should not automatically be interpreted as industry-wide deterioration.
Another concern is the increasing use of arrangements allowing borrowers to postpone cash interest payments or renegotiate repayment obligations. Such measures can provide temporary relief but may also conceal deteriorating cash flow. Yahoo Finance
Are Banks Becoming More Cautious?
On November 6, Reuters reported that ING was offering approximately $500 million of data-center loans for sale. The portfolio includes twelve loans, with bids due November 19.
There is no established evidence that this represents a forced sale or that substantial discounts will be necessary.
More significantly, Reuters reported on November 9 that banks and credit investors are becoming increasingly selective about AI infrastructure lending. Particular scrutiny is being directed toward financing arrangements, construction deadlines, customer commitments and future cash flow.
This is evidence of tightening lending appetite in an important market segment, although not a general withdrawal of bank financing from private credit. Reuters
AI Data Centers: Political Risk Enters the Credit Equation
The November 3 US elections introduced another potential complication.
Newly elected governors in Texas, Ohio and Georgia have proposed restrictions or temporary pauses affecting data-center construction. Concerns include electricity costs, grid capacity, water consumption, tax incentives and community opposition.
Existing restrictions and permitting procedures must be distinguished from campaign proposals that have not yet become law.
Nevertheless, construction delays could have substantial financial consequences.
Developers may face additional interest expense before projects generate revenue. Lenders could confront refinancing requests, while construction companies, equipment suppliers and other commercial creditors might experience delayed payments.
The exposure is potentially significant, but proposed construction capacity must not be confused with outstanding loans or demonstrated financial losses.
As of November 9, the evidence does not establish widespread project cancellations attributable to the election results. Reuters
Financial Stability: What Has Changed?
The Financial Stability Board has already warned about the growing financial connections between private-credit funds, banks and insurers, together with valuation uncertainty and limited transparency.
Recent disclosures concerning Bermuda insurers reinforce the importance of understanding these relationships. However, exposure figures are not equivalent to realized credit losses.
There is still no sufficiently verified evidence of widespread forced private-loan liquidation, systemic bank-financing withdrawals or broad supplier-payment failures.
Our assessment therefore remains unchanged: private credit faces elevated and persistent stress, but a systemic financial crisis has not been demonstrated.
The development deserving particular attention is the emerging caution among lenders financing AI infrastructure.
For commercial credit-information professionals, the essential question is whether deteriorating business payment behavior will reveal emerging borrower difficulties before they appear in conventional loan-default statistics. Financial Stability Board
Brief Technical Glossary
BDC: A business development company that invests in loans and other financing for businesses. Non-accrual: A loan on which a lender stops recognizing expected interest income because repayment has become doubtful. PIK (payment-in-kind): Interest added to outstanding debt instead of being paid immediately in cash. Redemption gate: A contractual restriction on how much investors may withdraw from a fund during a given period. NAV: Net asset value, representing a fund’s assets minus its liabilities.
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Principal references are the November 6 Stanger Report, Goldman Sachs BDC’s November 5 results, Barings BDC’s regulatory filing, Reuters’ November 6 data-center loan sale report, Reuters’ November 9 AI lending investigation, Reuters’ Texas election analysis and the FSB’s May 2026 private-credit report.
Intrepid Explorers, LLC Research supported by ChatGPT