{"text":[[{"start":8.34,"text":"Banks are increasingly turning to credit insurance to lay off risks tied to their data centre loans as lenders seek to stretch internal limits to pour more money into the AI boom."}],[{"start":18.52,"text":"Barclays recently bought insurance to hedge its exposure to AI infrastructure loans, according to a person familiar with its programme, while HSBC has also explored using the fast-growing product."}],[{"start":30.64,"text":"JPMorgan Chase considered whether to use the product in recent weeks, according to people familiar with the discussions. However, the US’s biggest bank ultimately decided against buying the insurance, one of the people said."}],[{"start":43.04,"text":"As big tech groups plough more money into AI infrastructure, lenders are seeking new ways to supply financing despite internal risk controls that limit their exposure to single companies, projects or sectors."}],[{"start":55.28,"text":"European and Canadian banks have long used credit insurance to reduce the capital they are required to have against loans. In contrast, US banks generally receive no capital relief from credit insurance and have typically relied on credit default swaps, derivatives designed to pay out if borrowers default."}],[{"start":72.2,"text":"The rising cost of CDS and the scale of AI debt issuance have prompted several US banks to explore credit insurance in recent weeks, brokers said."}],[{"start":81.1,"text":"“Even if banks are not able to get capital relief, they’re able to get . . . relief to lend more to data centres by using this hedge,” said Azi Larsen, a broker at Marsh."}],[{"start":90.76,"text":"In a typical deal, a bank seeking to lend hundreds of millions of dollars to a single project would transfer 20 to 50 per cent of its exposure to insurers, she added, freeing up capacity and allowing the bank’s risk committees to approve larger loan packages."}],[{"start":105.2,"text":"The building boom in AI infrastructure has provoked a backlash in the US, where 38 ballot measures opposing data centres passed in the midterm elections last week. Credit insurance pays out in the event of a default, regardless of what caused the project to fail."}],[{"start":119.6,"text":"Lenders “don’t have to show that . . . there’s been a political event that has caused there to be a lot of pushback on the construction of a data centre,” Larsen said. “As long as the bank has abided by the terms and conditions of the policy, they just have to demonstrate that there was a default.”"}],[{"start":135.32,"text":"Insurers including AIG, Chubb and Axa are among more than 70 providers of credit insurance for project finance, up from only a handful a decade ago."}],[{"start":145.36,"text":"Strong demand for data centre cover has supported prices, said brokers, with insurers demanding annual premiums ranging from 50 to 70 per cent of what banks stand to make on that portion of their data centre loans."}],[{"start":157.76,"text":"Banks are willing to pay in order to make larger loans to a single data centre, said Charlie Radcliffe of specialist broker BPL, helping them to secure majority lender status or show support for a particular client."}],[{"start":170.36,"text":"Prices on data centre exposure have proved resilient to a broader downturn in credit insurance prices, added Radcliffe: “In the world of data centres, insurers can be really picky.”"}],[{"start":183.84,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794388166_1311.mp3"}