Paul Kedrosky
speaker
1,259 appearances
4 recordings
2 series
first heard Apr 2026
last heard 3d ago
Paul Kedrosky’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 4 in all, peaking in Sep 2026 with 1.
Appearances
So the tenure has gone up like a hundred basis points over the last, so you know, one percent roughly over the last six months or it's been the last three months, which is crazy.
So that it directly translates into the funding cost for new data centers, but it doesn't stop there.
because if the if the tenure goes up a hundred basis points, the spread goes up even more, meaning that it's not just that I now have to rate I have to put out my debt at a hundred basis points higher.
The system recognizes that this is a stressful moment.
And so the spread between uh the rate at which you raise and the rate on ten years, which is often something you use to anchor the the cost of financing, might go at 150, might go at 200 basis points because the system's under stress.
So every time you see rates increased, say to yourself instead, oops, it just got a lot more expensive and difficult for data centers to justify the future cash flows on top of which
they're they're building these data centers.
And so
To answer your question, we're within six to twelve months on the outside of this of that aspect of it all breaking because it's very clear that they're not going to earn uh eleven and twelve percent, which are the kinds of numbers we're seeing at the at the most stressed end of the market, ten plus anyways.
That's not gonna happen.
There's no economics that does that.
Right.
That's exactly right.
So but that in turn has that in turn has consequences because that debt is the c is is collateral.
No one just holds anything.
It's that's used as collateral for other economic activity that I'm doing, whether it's you know, leverage or other borrowing.
And so as this debt becomes less valuable, it reduces my ability to do other things in the economy as a functioning, you know, kind of economic actor.
And so you have to always think about it.
I like to point people, there's some
Great books out there by people like Donna Meadows and others.
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