Global finance watchdog warns over private credit industry fuelling AI boom
The private credit industry’s role in fuelling the AI boom could backfire, with a sharp correction leading to “sizeable” losses, the Financial Stability Board has warned.A new report into private credit by the global watchdog, which monitors financial authorities including central banks in 24 countries, found that the healthcare, services, and tech sectors have become the biggest borrowers of private credit.That includes AI firms, which have increasingly turned to private lenders to fund datacentres and other infrastructure.The AI industry accounted for more than a third of private credit deals in 2025, up from 17% over the previous five years.“This focus on specific sectors may leave private credit funds exposed to idiosyncratic risks … [and] increase exposure to region or industry-specific shocks,” the report warned.
On AI loans, the FSB warned that a “sharp correction in asset valuations, which have increased rapidly, could lead to sizeable credit losses to private credit investors”.“This could be triggered by any significant shortfall in the supply of electricity, a critical factor in the construction and operation of datacentres, which could lead to delays or cancellations of projects,” the FSB said.Meanwhile, AI company valuations could be hit if investments lead to an oversupply of datacentres, which eventually outpaces demand for AI, leading to lower-than-expected returns for investors.The FSB report adds to ongoing concerns over potentially risky loans arranged by private credit firms, which lend to companies using investor money – rather than customer deposits or loans backed by those deposits – outside the traditional regulated banking system.Those anxieties recently led to a multibillion-pound surge in withdrawals from some private credit funds, forcing some to cap the amount of money that clients can pull out.
While advocates have said private credit lenders are better equipped to monitor risks and provide bespoke loan arrangements, the FSB said private credit borrowers typically had lower credit scores and larger debts than those turning to traditional banks for loans.However, traditional banks are increasingly exposed to the private credit sector, either by lending directly to private credit funds, financing riskier fund portfolios, or lending to firms that are simultaneously borrowing from private credit firms.Meanwhile, a growing number of banks are agreeing to partner with asset managers on private credit deals.That has exposed banks to an opaque sector where lenders “may have only partial information about borrowers, as illustrated by recent corporate bankruptcies and failings”, the FSB said.The global watchdog pointed to last year’s collapse of two private credit-backed US automotive companies, Tricolor and First Brands.
Both firms have since been hit with fraud allegations, raising concerns over whether private credit lenders may have been too lenient in deciding whether companies were worth lending to.Banks including JP Morgan and Barclays both suffered losses on the back of Tricolor’s collapse, while others such as UBS and Jefferies reported significant exposures to the failures.The FSB report added that Tricolour and First Brands’ failures together proved “how tightly integrated banks can be in the intricate web of exposures in corporate credit”.
Man charged over bomb hoax after Peter Kay show evacuated
A man has been charged over a bomb hoax after a live show by comedian Peter Kay in Birmingham was stopped when a “potentially suspicious bag” was found around the venue.The Utilita Arena Birmingham was evacuated and a 19-year-old man was taken into custody, West Midlands police said on Friday evening.On Saturday, the force said: “A man has been charged in connection with the events which led to the evacuation of the Utilita Arena in Birmingham last night.“Omar Majed, 19, has been charged with false communications relating to a bomb hoax,” a police spokesperson said. “Majed, of Washwood Heath, Birmingham, has been remanded to appear before magistrates in Birmingham on 4 May
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Have you ever won a spelling bee?No! I don’t think I’ve entered any formalised spelling competition. When I was eight or nine, there was a guy who I used to copy during tests. We were doing a spelling test and the word was “vehicle” and he made an absolutely terrible attempt at it. I knew he’d spelled it wrong and was like, wait – have I been copying someone who’s more stupid than me this whole time?Which word do you hate the most?None! That’s crazy! I love all words. They’re just out there, doing their best
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If you’ve tuned in to Infowars over the years, you might have heard a very angry man screaming about the 2020 election being stolen for “reanimated corpse” Joe Biden, or chemicals in the water turning frogs gay, or the Sandy Hook school shooting, which killed 20 children and six staff members, being faked. Founded in 1999, Alex Jones’s Infowars has long been a platform for toxic conspiracy theories with real-life consequences, in addition to weird dietary supplements. But if the Onion has its way, the InfoWars of the future will have a very different impact.The satirical newspaper has been working for several years to take over the site, amid legal battles over Jones’s false claims about the 2012 Sandy Hook shooting. Pending a Texas court’s approval, the platform could soon be in the hands of the Onion and a newly installed creative director, comedian Tim Heidecker, known for his surreal sketches and mockery of the far right
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The Devil Wears Prada 2 to Lenny Henry: your complete entertainment guide to the week ahead
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Peter Kay show stopped and 19-year-old in custody after ‘suspicious bag’ found
A live show by comedian Peter Kay in Birmingham has been stopped after a “potential suspicious bag” was found around the venue.The Utilita Arena Birmingham was evacuated and a 19-year-old man was taken into custody, West Midlands police said on Friday evening.The force said: “We are assisting with an evacuation at the Utilita Arena in Birmingham after a potential suspicious bag was found.“A 19-year-old man is in custody and as a precaution the site is currently subject of a search. We will provide further updates when we can
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