Morgan Stanley Pushes Leveraged Loans for Data Center Builds

Morgan Stanley, already one of the top banks financing data center development, is now pitching those same clients on a different funding playbook: leveraged loans rather than traditional bonds.

The bank estimates roughly $15 billion in such loans will be issued this year. That's a significant chunk of capital flowing into data center infrastructure through a debt instrument typically associated with higher risk — and higher returns for investors.

The move reflects the explosive demand for data center capacity, driven largely by AI workloads and cloud expansion. Leveraged loans offer developers faster access to capital with more flexible terms compared to bond markets.

For Morgan Stanley, it's a play to deepen its grip on the data center financing boom while opening a new revenue stream on the lending side. The data center gold rush now has its own preferred financial instrument.