AI Shadow Credit Guarantees Reach $70B, NVIDIA Residual Support Could Hit Hundreds of Billions

Unrecorded $70B in AI chip guarantees raises bond market concerns. NVIDIA’s potential residual value support could reach hundreds of billions, creating significant contingent liability risks.

Woofun AI reports that bond investors are scrutinizing approximately $70 billion in off-balance-sheet guarantee obligations from major AI firms. Following NVIDIA's recent $500 billion financing partnership announcement, the company may provide residual value support for related debt transactions worth hundreds of billions. In these structures, special purpose vehicles borrow to purchase chips and repay debt via usage cash flows; if customers default, assets are re-leased or sold, with guarantors covering any shortfall.

NVIDIA CEO Jensen Huang stated the company can support up to 25% of a project's value. CreditSights analysts liken this to NVIDIA 'selling put options,' noting low costs during booms but high risk during downturns. Rating agencies now treat some arrangements as contingent liabilities. Meta utilized similar structures for $27 billion and $13 billion in data center debt, while Broadcom provided most support for Anthropic's $35 billion financing. Moody's warns that rapid growth in such deals could constrain Broadcom's financial flexibility and pressure its credit rating.