Report published September 25, 2026

Please Don't Stop the Muse-ic: CLOs Ability to Fund the Next Great AI Debt Binge

Bank of America · September 25, 2026

Rate volatility pushed 10-year Treasury yields to 5.22%, prompting elevated trading volumes in CLO AAAs as investors rotated into discount fixed-rate paper. Concurrently, AI data center and GPU financing represents a potential $100bn+ market expansion opportunity for CLO portfolios.

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Finvaulta summarizes Bank of America's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.

Key Takeaways

1.AI-driven data center and GPU financing presents a potential $100bn+ term loan opportunity where CLOs can play a crucial financing role, with 2026 vintages increasingly permitting project finance exposures.
2.CLO AAAs remain the 'Best Asset to buy, Best Asset to sell' as rate volatility drove elevated weekly trading volumes of $10bn and $8bn with secondary AAA spreads widening modestly by 2 bps to 120 bps.
3.US insurance companies purchased $39bn of CLOs and fund finance in Q2 2026, though BSL CLO net holdings declined due to $8bn in dispositions and approximately $20bn in paydowns.

Market Overview: Best asset to buy, best asset to sell
Where do they stand on the next big lending wave
Current exposure of CLOs to data center / GPU financing term loans
Spreads vs ratings
Funding the picks & shovels
Examining deal provisions on Project Finance
Insurance Q2 purchase
Insurance Holdings Overview
Insurance 2026 Q2 Purchases and Dispositions of SP Products
Software v9.25.2026 update: Short maturity index now higher
Make amends & then extend:
Equity returns update
CLO equity price & NAV evolution
Stay put for higher: Static deals outperform
Do refi/reset activities create a difference?
Lifetime Performance by vintages
2.0 Equity return on Vol & correlation
CCC upgrades/downgrades
Weekly market recap
Secondary market
Primary & Secondary supply
CLO Spread
CLO Issuance

Report data

Exhibit 7: AI / Data Center Debt: Capital Markets Spectrum — as of September 24, 2026.

Metric	Estimate	Context
10-year US Treasury yield peak	5.22%	10-year UST yield reached its highest level since 2007 amid hot business activity and hawkish Fed commentary.
CLO secondary trading volume (current week by Thursday)	8.0 USD billion	Trading volume reached $8bn following $10bn in the prior week.
CLO exposure to data center & GPU financing loans	4.5 USD billion	Current term loan exposure in BSL CLOs backing data center and GPU financing.
Insurance Securitized Products Purchases in Q2 2026	122.0 USD billion	Total purchases of securitized products by US insurance firms in Q2.
CLO equity return through August month-end	-7.1%	Composed of -22% price return and +15% interest distributions.