The Credit Edge by Bloomberg Intelligence DoubleLine Is Ringing Alarm Bells on the AI Debt Funding Bonanza
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Nov 6, 2025 Robert Cohen, Director of Global Developed Credit at DoubleLine Capital, provides valuable insights into the potential pitfalls of the AI funding boom. He emphasizes the need for caution regarding AI-related investments and warns of possible spillovers if the market collapses. Cohen discusses the challenges in private debt markets, the importance of selective corporate bond investment, and the outlook for corporate issuance through 2026. He also highlights the significance of active management and prudent strategies in navigating the uncertain landscape.
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Caution On The AI Debt Bonanza
- Be cautious about AI-driven debt booms and off‑balance sheet structures.
- Assess tangential sectors like power, materials, and chemicals for spillover risk if projects underperform.
Index Spreads Hide Wide Dispersion
- Spread dispersion in high yield is near historic highs so index spreads hide big differences between names.
- Evaluate fair value bottom‑up by credit rather than relying on index levels.
Say No And Rotate Assets
- Use active management and refuse to buy deals you dislike; you are not forced to own every new issue.
- Rotate across sectors and move cash to other fixed‑income areas when corporate opportunities look overpriced.