“When you're deploying trillions of dollars of capital in a way that has never been deployed in our lifetimes, there are bound to be air pockets.”
Thoughts on the Market · Money & Markets · November 2026
Context
Asked how he sees the AI capex thesis and the role credit markets play in it, Dan Toscano of Morgan Stanley's investment banking division says nothing in 2026 has surprised him. He adds that the debate has moved from how AI works to what it is worth.
Transcript
…on the role that credit markets will play in enabling that transformation. So anyway, we cut it, we are talking about trillions of dollars of capex involved in the context of AI Buildout out. How are you thinking about the AI CapEx thesis and the role that the credit markets are playing?
And every time I talk to you, the numbers go up. These numbers continue to expand. The opportunity set continues to expand for our clients. And I would say that nothing surprised me of what we've seen over the course of 2026. This is not simple and this is not easy. And there are, as our CEO likes to say, known unknowns. And they factor heavily in the sentiment of investors. And when you're deploying trillions of dollars of capital in a way that has never been deployed in our lifetimes, there are bound to be air pockets. And it just keeps getting bigger and bigger. And it's interesting to me that a lot of the discussion out in the marketplace these days has moved a little bit away from what is this and how does it work to what's the value proposition. And I think ultimately that's the biggest question. And credit investors are asking that question in the form of trying to understand what can go wrong. It's the…
The markets are really questioning the return on the invested capital, how soon the returns will get realized, and monetization is a key word here. But at the back of this, we see that the level of rates has increased pretty meaningfully. Spreads are widened. So overall borrowing costs for issuers…
Yeah, I mean, there's a lot to unpack there. But look, I would say this, on the topic of, you know, what is the return, what is the value proposition, I've heard really two schools of thought from the marketplace. One is we think the return value proposition is high. And you've done some work on…
In all my years of talking to you and learning from you, the one thing that's always stood out for me is details matter, especially when we talk about leveraged credit. In the context of AI financing in the leveraged credit market or the broader credit market, what type of details matter?
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