Willis Re has highlighted the credit and surety risks related to data centres as huge sums are deployed to building the facilities.

In a report, the broker says tech giants Alphabet, Amazon, Meta and Microsoft have this year flagged more than $US700 billion ($996 billion) in capital spending on data centres between them.

Project finance for data centres reached about $US170 billion ($242 billion) last year and banks are looking to distribute that risk, including through significant risk transfer and credit insurance.

“This is where structured credit and credit insurance come in, and aggregation is becoming the limiting factor because the market keeps meeting the same few hyperscaler names,” the report says.

“Data centres are now a material exposure for the credit, surety and political risk market, and will stay that way for years.”

While the US tech companies are regarded as “a strong credit”, concerns around data centre exposure lie elsewhere.

“Data centres are the exposure question of the decade for our market,” Willis Re head of credit, surety and political risk James Loggie said.

“The hyperscalers themselves are strong credits, but the risks around them need more care, from second-tier tenants and the contractors and suppliers further down the chain, to securing power and adequate insurance for these projects. That’s where the market needs to focus.”

The Willis Re credit, surety and political risk market report says capacity is abundant, which is setting the tone for the January renewal season.

“Reinsurance capital is at a record high and new treaty capacity continues to enter the market. Cedents will find support, but reinsurers will be selective about who gets the best terms,” it says.