Data Centers Add Both Opportunity and Risk for Municipal Bonds
Dow Jones
Aug 11
1109 ET - Expanding AI data centers have a growing impact on municipal bond markets, spurring issuance while presenting new risks, LPL Financial's Lawrence Gillum and Brian Booe say in a note. Power-hungry data centers require grid upgrades, leading to an increase of more than 25% in electric power issuance so far this year. "The gas prepayment sector, long a niche, has grown to more than 5% of the municipal index with roughly $100 billion outstanding," Gillum and Booe say. Host communities can benefit from an increased tax base. However, backlash against higher utility bills associated with data centers represents a risk, they say.
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