Goldman Sachs Group Inc. (NYSE: GS) hosted its 11th annual leveraged finance and credit conference last week in Dana Point, California, where artificial intelligence infrastructure consumed nearly every major conversation.
More than 400 investment executives and 85 borrowers gathered at the Waldorf Astoria’s Monarch Beach resort to discuss the enormous financing demands shaping today’s credit markets.
Attendees included American Airlines Group Inc., Caesars Entertainment Inc., Applied Digital Corp., and Cipher Digital Inc., alongside a broad cross-section of leveraged finance practitioners and investors.
AI enthusiasm kept spirits high at the conference despite persistent concerns over a sluggish mergers and acquisitions environment, elevated interest rates, and ongoing tensions surrounding the Iran conflict.
Companies have raised more than $20 billion in the US junk-bond market over the last two months alone, underscoring the extraordinary capital appetite fueling artificial intelligence infrastructure expansion.
Apollo Global Management Inc. and Blackstone Inc. are assembling a $36 billion deal to support AI infrastructure development by Anthropic PBC, which separately announced Monday it had confidentially submitted draft paperwork for a public listing.
“There’s such an enormous capex need across data centers, power, chips, that is so large that it really touches every market that we are involved in,” said Miriam Wheeler, Goldman’s global head of leveraged finance, in an interview at the conference.
“For our capital solutions group right now, AI is probably the number one theme that we’re spending time on,” Wheeler added, reflecting the degree to which the technology has reshaped the bank’s deal priorities.
While most corporate bonds issued for AI facilities currently trade at near-identical levels, bankers are warning that market saturation will eventually force pricing divergence among borrowers.
“You’re going to get to a point where those that lag on execution will see that in their cost of capital,” said Chris Bonner, Goldman’s head of leveraged finance for the Americas, cautioning that construction delays could meaningfully raise borrowing costs for data center developers.
Bonner described the sheer volume of capital still required across the AI ecosystem as “staggering,” adding, “I don’t see that slowing down anytime soon,” during a separate interview at the conference.
Traditional mergers and acquisitions activity remains a sore point, with bankers acknowledging that a steady deal flow has yet to materialize despite some landmark transactions adding to overall supply.
Caesars Entertainment’s agreement to be acquired by Fertitta Entertainment Inc. became a significant point of discussion, with Goldman and Morgan Stanley co-leading the $5.7 billion transaction supported by eight additional banks.
Caesars Chief Financial Officer Bret Yunker attended the conference in person, meeting privately with investors to field questions about the pending deal and the company’s financial outlook.
Tim Ingrassia, Goldman’s Co-Chairman of global mergers and acquisitions, addressed attendees over a lunch buffet, noting that corporate M&A and large buyouts are currently sustaining deal markets while mid-sized private equity transactions remain sluggish.
Wheeler struck a cautiously optimistic note on the broader outlook, saying, “The debt markets are certainly constructive, both in terms of size and pricing, maybe with a small asterisk for the rate move over the last week or so, but we think that that backdrop is certainly conducive to more deal activity.”
