AI Credit Risk Dashboard Update

AI Credit Risk Dashboard Update

10/20/2026 04:00 AM

Neocloud credit risk has increased materially since our September dashboard launch, but modeled default probabilities remain below distressed levels.

The latest dashboard update reinforces the distinction we made at launch: rising risk in specialist AI infrastructure businesses does not necessarily imply distress across the broader ecosystem. Since the September newsletter's 9/25 snapshot, the AI Credit Pulse Index has increased from 43 to 65 basis points (bps) as of October 16. Specialist AI cloud and GPU service providers' average one-year PD rose from 41 to 98 bps, while AI hosting and powered campuses increased from 62 to 184 bps. These readings extend the deterioration that was emerging in September.

The latest week accounts for a substantial part of that deterioration. The category-balanced AI Credit Pulse Index rose 18 bps, while the separate, Company Average increased 6 bps to 28 bps. Specialist cloud PDs increased 46 bps, placing the move at the 93rd percentile of historical absolute weekly changes (since Nov 2022). Powered campuses rose 91 bps, reaching the 95^th percentile respectively. These are significant changes relative to each category's history, even though their current PD levels are not historically extreme.

AI Credit Risk Dashboard (KRIS 1Yr PD in basis points)

AI Credit Risk Dashboard (KRIS 1Yr PD in basis points)

Cogent Communications Holdings, Inc. illustrates why the headline index requires constituent-level interpretation. Its October 16 it had one-year PD of 1,015 bps that materially elevated the three-company fiber and digital transport category, whose average now stands at 553 bps. Under the index's equal-category methodology, fiber contributes approximately 37 bps to the 65 bps index level, including approximately 23 bps attributable to Cogent Communications Holdings, Inc. These are contributions to the current level, not attribution of the weekly increase.

The company in question faces idiosyncratic refinancing and operating pressures. On October 15, S&P Global Ratings downgraded Cogent Communications Group LLC to CCC+ with a negative outlook, citing $700 million of unsecured debt due in June 2027, insufficient cash to repay it and increased distressed exchange risk. Declining legacy revenue and the eventual expiration of acquisition-related payments add pressure. This supports treating fiber's elevated reading as partly issuer-specific and not evidence of generalized weakness in AI connectivity demand.

Elsewhere, deterioration remains uneven. Semiconductor and electrical-equipment PDs are below September readings; established data center operators and regulated utilities also improved during the latest week. The dashboard, therefore, points to concentrated vulnerabilities, not synchronized deterioration throughout the AI investment chain.

The selloff surrounding Gartner's October 14 release sharpened attention on neocloud economics. Its forecast concerned providers ceasing independent operations, including through consolidation, not an equivalent proportion defaulting. Moreover, CoreWeave's bond yields had already approached 15% before the release.

Our KDPs do not incorporate CDS or bond prices, providing an independently constructed perspective. CDS spreads are not default probabilities; meaningful comparisons require aligned issuers, dates and horizons, alongside recovery assumptions and risk premiums.

The takeaway is neither complacency nor crisis. The latest readings reinforce the case for monitoring specialist cloud providers and powered campuses separately from the broader AI ecosystem.

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Editorial contact: Stas Melnikov - [email protected]