The AI data boom will drive activity in 2026 – MUFG co-head of EMEA capital markets Fabianna Del Canto
The driver for 2026 will be the real step-change in capex requirements all around the AI data boom and the needs of hyperscalers, said Fabianna Del Canto, co-head of EMEA capital markets at MUFG, on the latest episode of the ‘Credit Exchange with Lisa Lee’ podcast.“The absolute quantum required by the data centres dwarfs really any other type of infra-spend that we’re seeing,” said Del Canto.Among myriad other effects, AI has brought about a previously-unimaginable type of demand on, effectively, the entire energy supply ecosystem. Because it’s impacting such a large-scale industry and multiple secondary ones, this is a “real seminal moment and period in time, in terms of how we’re shaping the economies going forward for the future,” she added.But financing the AI boom will look different in Europe and the US.“In Europe, you’re seeing a lot of discussion amongst leaders in the energy space trying to solve this from a sustainable angle,” Del Canto said. “It’s not energy at any cost or any type.”Beyond data centres’ capex needs, Del Canto expects capital markets to be just as busy in 2026, if not busier. As a result, there’s a risk of spreads widening.“We see a very healthy pipeline, and supply is going to keep ticking up in our view,” she said.
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We are seeing an insurance renaissance – AllianceBernstein deputy CIO of insurance Gary Zhu
Innovation on the liability side is allowing insurance companies to change their funding costs and be more competitive, says Gary Zhu, deputy chief investment officer of insurance at AllianceBernstein (AB), in the latest episode of ‘Credit Exchange with Lisa Lee’.Zhu discusses the proliferation of insurance capital into private assets. He explains that dynamic has to do with lengthening lifespans and a declining lapse rate, the percentage of policies that don’t renew, which has allowed insurance firms more flexibility on liquidity.“They can deploy that capital into private assets, and earn that incremental spread, without giving up anything that they needed,” he says.On the recent stock market volatility, Zhu says that staying invested during good times and bad is important for equity investors in general. On investing, AB’s insurance silo, which has around $200bn in AUM, has been overweight allocations to residential housing credit.“We like the housing market in the US,” he says. “So [the] residential credit market seems to be a place that people have underappreciated the value in the housing markets.”
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The tide of easy money pushes everything upwards – Satori Insights founder Matt King
The end of the US government shutdown has paved the way for a “renewed melt up,” says Matt King, founder of Satori Insights, on the latest episode of Credit Exchange with Lisa Lee. Not just risk assets like equities and credit, but things like gold and Swiss francs, as people worry about how this ends – even as the tide of easy money pushes everything upwards, says King, formerly Citi’s global markets strategist and one of the most widely-followed commentators on financial markets.Since early 2024, the linkage between central bank liquidity and credit spreads and equities has weakened somewhat. It’s not disappeared entirely, but in equities especially, different factors have had an impact. Exuberance and excitement around AI are part of the story, King says, but there’s also ongoing support from fiscal policy and huge fiscal deficits, as well as the massive growth in repo to around a trillion dollars a year, which is becoming increasingly important.“It’s about how much money we’re creating and where that money is then going,” King argues. “I think that’s the main mistake investors have made. If you’ve tried to invest on the basis of your economic view, for over a decade, you’ve struggled, because the drivers here are markets first, and then the economy bringing up the rear.”
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Lessons learned from First Brands and Tricolor – Tetragon co-CIO Dagmara Michalczuk
The bankruptcies of auto sector firms First Brands and Tricolor Holdings hold “lessons for the future” for credit investors, says Tetragon co-CIO Dagmara Michalczuk on the latest episode of Credit Exchange with Lisa Lee. “The governance issue, although it seems like a soft and fuzzy idea, is incredibly important,” Michalczuk says. “Investing with folks that are not transparent – that has its risks. Lessons can be learned and should have been learned, in both instances.”Overall, Michalczuk’s assessment of the general macro outlook sees slow growth, “slower than what we saw post-pandemic.” With this said, she agrees with the consensus view in the market that 2026 might see a reacceleration of growth, given the downward trajectory of rates, significant fiscal stimulus in the US and Europe, deregulation, and the ongoing capital investment in AI.Credit investors should be prudent and have informed views and opinions on AI, Michalczuk says. At Tetragon, Michalczuk’s team is adapting by looking across their portfolio, “not just [at] software and tech companies, but all of our exposures,” considering both potential positive and negative impacts. “The big concern… is we’re missing something, [that] a business very rapidly becomes undone by a newcomer that disrupts the industry.” That’s why continual reanalysis over time is important, Michalczuk says.
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Due diligence matters in credit investing – Crescent president Chris Wright
“There are lots of mixed signals out there,” says Chris Wright, president of Crescent Capital Group, on the latest episode of Credit Exchange with Lisa Lee. That’s creating uncertainty. “When we think about the investment environment, we approach it with caution.”On the bankruptcies of First Brands and Tricolor, Wright doesn’t see them as canaries in the coalmine or a tipping point in the economy. But they do show that due diligence matters. There were audit flags, governance failures, and opaque structures that sounded warning bells. “We have to be diligent in our work,” Wright notes.Crescent, a global credit manager with almost $50bn in AUM, recently launched a CLO ETF and has plans to introduce other product, Wright adds. While too early to say whether Crescent will start a European CLO management business, it’s “certainly something that is on our drawing board and we’re spending a lot of time thinking about and assessing,”, Wright says.
Credit Exchange with Lisa Lee. Explore the latest trends in global credit markets with the biggest movers and shapers on Wall Street and the City, hosted by financial reporting veteran Lisa Lee.
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