Blackstone’s Khaira disputes fears of an AI debt crisis
Khaira said major technology customers support infrastructure lending, while acknowledging higher borrowing costs and wider credit spreads.
BOJ flags AI market risks and cyber threats to Japan's banks
Increased lending to overseas non-bank institutions may have left Japan's financial system more exposed to global market fluctuations, the central bank said.
Japan's banks could face spillovers from AI-related market shocks and growing cybersecurity threats, the Bank of Japan warned on October 23. Its semiannual assessment found no major financial imbalances, but said higher stock and property prices merited scrutiny with interest rates still low.
The BOJ pointed to domestic banks' expanding loans to foreign non-bank financial institutions as a potential channel for global market volatility to reach Japan. Those institutions include private credit providers and private equity funds and are major funders of hyperscalers.
A decline in expected profitability from AI investment could lead overseas non-bank institutions to change their portfolios, magnifying shocks that could spread to Japan, the central bank said. It also warned that hyperscalers falling short of market expectations could trigger a global correction affecting Japanese shares that have gained on optimism over AI-sector profits. Banks' equity holdings expose them to market risk, it added.
The central bank also called on financial institutions to improve their readiness for cyber threats, including misuse of generative AI. It said the effects of a cyber incident could extend beyond an institution and its customers to other financial firms.
On property, the BOJ said price increases had accelerated across Japan's three major metropolitan areas. Strong demand, including from foreign investors, was putting upward pressure on prices alongside rising construction costs and labor shortages, it said.