Comment by wmf
13 hours ago
The latest xAI GPU SPV is 2/3 debt; maybe that's a trend or maybe not. The debt will be defaulted and the equity will be recapitalized to almost nothing. Same outcome.
13 hours ago
The latest xAI GPU SPV is 2/3 debt; maybe that's a trend or maybe not. The debt will be defaulted and the equity will be recapitalized to almost nothing. Same outcome.
That is interesting because bubble debt is a lot more hazardous and more likely to cause a recession than bubble equity is, hence all the rules on lenders around Capital Adequacy, Liquidity, and Risk Management/Supervision for which no analog exists for equity investors.
Do those rules apply to private credit and sovereign wealth?
Probably not. They might apply only to banks and even then only banks subject to EU or Anglosphere jurisidiction.