DBS CEO: Market Reassessing Risks of AI Infrastructure Investments

DBS Group Chief Executive Chan Sook San said the market is reassessing risks associated with artificial intelligence (AI) infrastructure investments, which could lead to more prudent financing in the AI sector. "The market has spoken," Chan said on Monday. "This is not a bad thing because investors now demand higher returns and scrutinize capital structures more closely. They want to ensure that the substantial capital flowing into the AI capital expenditure ecosystem ultimately generates long-term investment returns sufficient to reward creditors, bondholders, or shareholders." Chan noted that weaker companies may face downgrades in credit ratings but believes this repricing of risk is "healthy" as the market seeks to ensure the sustainability of large-scale funding. She added that DBS has facilitated approximately S$25 billion (US$20 billion) in AI-related transactions this year, typically acting as a syndicated loan lead and retaining only a small portion of the risk exposure itself. Most of this financing is directed toward hardware, including semiconductors, memory chips, and data centers. (Caixin Global)