They allow hyperscalers to expand capacity rapidly while keeping the bulk of associated debt off their consolidated balance sheets, converting what would be large capital expenditures into multi-year operating leases or offtake commitments. This creates meaningful “shadow” leverage and interconnected risks.
How the Structures Typically Work
A dedicated vehicle (SPV, joint venture, or variable…
Historical Context: The Great Treasury Unwind
China's US Treasury holdings have undergone 'systematic liquidation' over 12+ years:
PeriodHoldings ($B)Δ vs PeakDriversMarket ImpactNov 2013 (Peak)$1,320—Accumulation phase: China recycles trade surplus into TreasuriesNone (buying)2014-2016$1,250-5.3%First diversification: Silk Road infrastructure, A-shares supportMinimal2017-2019$1,120-15.2%Trade War I: Trump tariffs, retaliation via Treasury sales10Y yield +50bp2020-2022$980-25.8%COVID, SWIFT weaponization fears (Russia precedent)Offset by…
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