AI is fueling the largest borrowing boom in at least a generation. But Greg Peters argues that focusing on AI alone misses the bigger story playing out across credit markets.
In this conversation, the co-chief investment officer of PGIM Fixed Income explains why PGIM is pursuing some AI-related financings while walking away from many others, why he believes we're entering a true credit-picker's market after years of the opposite, and what lessons he learned from the tech bubble in the late 1990s. You’ll enjoy his story about false diversification and an invented market sector from that time.
Peters also discusses the uncertainty surrounding AI's long-term economics, why he readily admits what he doesn’t know, and how the lines between public and private credit continue to blur, and why that matters to investors.
Other topics we touched on:
The debate inside PGIM over AI companies’ claims about future revenue and the difficulty of getting information.
Why "30 years is a long time" when financing a rapidly changing technology.
What protections investors should get when financing data-centers
Why Peters believes credit investors have unusual negotiating power despite being late in the credit cycle and why they should use that power.
How investors should think about diversification when so many assets share similar underlying risk drivers.