Morgan Stanley: AI Boom Faces Headwinds from High Borrowing Costs

Carolyn Campbell, an ABS strategist at Morgan Stanley, notes that rising borrowing costs are slowing the AI data center construction boom. Since the start of the year, five-year U.S. Treasury yields have risen by more than 1 percentage point, and yields on high-rated data center bonds have climbed from below 5% to nearly 7%. Data center operators have issued approximately $15 billion in ABS and $7 billion in CMBS so far in 2026.