AI Debt Protection Costs Range From 50 to 1,100 Basis Points

J.P. Morgan Private Bank’s Oct. 23 analysis put five-year credit protection for AI borrowers at figures from 50 to 1,100 basis points, highlighting a sharp cost gap among borrowers.

Spreads were 50 to 120 basis points for large AI companies with strong cash flow. They approached 300 basis points for some established investment-grade infrastructure borrowers. One unnamed, financing-dependent borrower had a spread of 1,100 basis points.

A credit default swap (CDS) spread is the cost of protection against a borrower failing to meet its debt obligations. At 100 basis points, protecting $10 million of debt costs about $100,000 a year. A wider spread raises that cost, but does not by itself establish that a borrower will default.

The 1,100-basis-point spread corresponded to a model-implied five-year default probability near or above 50%, compared with below 30% a year earlier. The estimate includes liquidity and risk premiums and is not a forecast.

“The AI label alone is no longer enough to reassure lenders,” J.P. Morgan Private Bank global investment strategist Justin Biemann said.

Technology credit faced more pressure than the broader investment-grade market, which remained comparatively stable. From Aug. 31 through Oct. 21, 2026, the Roundhill Generative AI & Technology ETF’s price return was down 7.1%, while the S&P 500 was up 0.9%.

The borrower gap adds context to earlier coverage of AI-linked credit protection trading.