The AI sell-off reaches bond markets, and bank supervisors are watching

What happened

The sell-off in AI-related shares has spread to the bonds and loans that finance the industry. On Friday 6 November, SoftBank Group's dollar bond due in 2032 fell 1.5 cents on the dollar, a record one-day drop according to Bloomberg-compiled data, and its yield rose to about 10%. SoftBank, which has invested nearly $65 billion in OpenAI, raised $11.1 billion of high-yield bonds in September. The average spread on investment-grade Asian dollar bonds, the extra yield over US Treasuries, reached 73 basis points on Thursday, the widest since July 2025.

The same day, Bloomberg reported that the European Central Bank, which supervises the euro area's largest banks, is considering a review of their lending to data centres, possibly through on-site inspections of how banks value future cash flows and collateral and provide for defaults. The ECB declined to comment. In a letter to European lawmakers, President Christine Lagarde wrote that the ECB "closely monitors the financing of the AI buildout and its implications for financial stability", warning of "circular financing arrangements" between firms in the AI ecosystem.

Why a stock market scare can become a credit problem

Shares are the first thing to move when investors lose confidence in an industry. Credit matters more for the economy. Data centres are largely built with borrowed money: bonds, bank loans and private credit. When lenders start to demand higher interest rates, or step back altogether, the cost of building rises and projects get delayed or cancelled. That slows investment, which has been one of the main drivers of US growth this year.

Signs of that pullback were already there. Hedge funds have been heavy sellers of AI-related debt, the Dutch bank ING is selling about $500 million of data-centre loans, and Alphabet had to offer considerably higher yields on a €6 billion bond sale this week than in May, Bloomberg reported.

Why supervisors are cautious, not alarmed

Bank supervisors worry about concentration and about loans valued on optimistic assumptions. But the numbers so far are modest: the chair of the European Banking Authority said last month that less than 4% of EU banks' total exposure is to the whole information and communications technology sector. Credit investors quoted by Bloomberg described the moves as measured, with some seeing buying opportunities. The risk, as BMI's Cedric Chehab put it, is that the sell-off "morphs into something much more aggressive" and tightens financial conditions for everyone.

Where it sits in the chain

This is Link 4, financial markets, with a direct route to Link 5: when credit for an industry becomes dearer, its investment slows, and so does the growth it supports.

What to watch

• Credit spreads on AI-linked companies and on high-yield bonds generally.
• Whether the ECB, or the Bank of England, which has also questioned lenders, formally launches a review.
• Big tech companies' borrowing and investment plans for 2027.