Show Notes
KKR's co-CEO flagged overcrowding in AI-related lending, and the question here is whether bank credit dashboards can see it. The position: they cannot. Cost of risk at 30 to 40 basis points and a eurozone NPL ratio near 1.9 percent describe 2023 to 2025 default behaviour, not what happens if AI capital spending disappoints. Coverage ratios only cushion loans already flagged, and IFRS 9 staging models watch borrowers one at a time.
You come away knowing how to read cost of risk, NPL ratio, coverage ratio and Stage 1 to Stage 2 migration together, how to treat Moody's and S&P AI-exposure estimates, and how to build a correlated AI capex stress overlay.
0:00 KKR's AI concentration warning explained 0:46 Why cost of risk looks suspiciously calm 1:27 Eurozone NPL ratio as lagging indicator 2:06 Coverage ratio and rating agency AI data 2:51 IFRS 9 staging misses correlated exposure 4:17 Running one correlated AI stress scenario
More from MBA Training Finance
Who protects minority shareholders when Elon Musk sits on both sides of a possible $3.5 trillion Tesla SpaceX merger? The hosts disagree. One calls the special committees of independent directors theatre, pointing to director Ehrenpreis appearing on both companies' independent lists. The other calls them the only legal tool available, noting the vote requires a majority of all outstanding Tesla shares.
What decides whether CohnReznick's private-equity-backed purchase of Aldrich works? The episode argues it is not the $108 million in revenue, which already has three public versions, but the 48 partners: whether they stay, what they are paid after the scrape, and whether the EBITDA created by cutting their pay survives. It also covers the APS structure, cross-selling claims and the separate value of the Aldrich Wealth arm.
Why did Starbucks break its no-comment policy to deny a Chipotle bid four days after the Financial Times report? The episode argues the market had already voted: a standard takeover premium meant paying about half of Starbucks' market value, synergies were thin, debt would rise to about six times operating profit, and an all-stock deal would cut earnings per share by about a tenth. It also weighs Brian Niccol's Chipotle history and the denial itself.
Oil above $102 pushed the 30-year Treasury yield to 5.683% and the 10-year to 5.342%, levels last seen in 2002. Is the driver Fed repricing, as Bank of America argues, or a term premium driven by US government debt, as JPMorgan argues? The episode leans toward JPMorgan, citing the bear steepener, while treating Thursday's solid 30-year auction as a fragile window.
Can you fund four-year Nvidia hardware with thirty-year paper and keep an investment-grade rating? SpaceX is trying, with roughly $10bn of bank loans and $30bn of bonds led by Apollo, and the position here is that the structure sells residual value rather than credit. The episode walks through the BBB threshold, the June $25bn deal that drew $90bn of orders then traded near 85 cents with a 2.27 point spread, Michael Burry's $176bn depreciation claim, and the Bank of England's circular arrangements warning.