In the United States, Morgan Stanley has been involved in discussions regarding a significant risk transfer (SRT) in relation to a portfolio of loans tied to businesses focused on AI infrastructure. These preliminary talks included potential investors and aimed to address growing credit exposure linked with data centers. According to sources familiar with the situation, this niche within the credit-risk transfer market is still developing, offering banks the opportunity to manage their credit risk and free up balance-sheet capacity for additional lending. In recent months, Morgan Stanley has been active in financing major AI-related projects, such as the more than $27 billion in debt and roughly $2.5 billion in equity financing it arranged for a special-purpose vehicle associated with Meta Platforms Inc.’s Hyperion data-center development in Louisiana. This underscores the bank's significant role in supporting the burgeoning data center industry. Additionally, Morgan Stanley has led junk-bond offerings for companies like TeraWulf Inc., Cipher Mining Inc., and Applied Digital Corp., with proceeds directed toward new data-center construction, showing its commitment to supporting this infrastructure growth. Morgan Stanley's strategists anticipate that substantial cloud computing investments, projected to reach around $3 trillion through 2028, will drive further developments in data center infrastructure. However, it is estimated that cash flow can only cover about half of this expenditure, indicating a need for significant borrowing from debt markets to fill the gap. The surge in lending poses a risk of overexposure for banks, particularly as certain entities such as Oracle Corp. have borrown heavily and experienced rising costs associated with default risk protection. As a result, banks involved with construction loans are becoming more conscious of their credit exposure. Earlier this year, Morgan Stanley proactively explored opportunities to pitch SRTs to private market funds in response to these challenges. Banks such as Citigroup Inc., JPMorgan Chase & Co., and Goldman Sachs Group Inc. have also been active in this space, promoting similar deals. Industry forecasts suggest that global sales of SRTs could see an average annual growth rate of 11% over the next two years, reflecting the growing interest in these financial instruments.