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NewsMaterial3 min readDisconfirmAI Editorial

Man Group Portfolio Manager Matt Rowe: Regulatory Certainty Is a Cost-Structure Factor for AI Data Center Investment

Matt Rowe, portfolio manager at Man Group, argues that delays in data center approvals have doubled investment-grade credit spreads for hyperscalers since early 2025; investors require a clear regulatory framework before committing to multi-decade projects. The GRID standards implemented by Pennsylvania Governor Josh Shapiro may serve as the template for Democratic federal policy, with regulatory certainty itself acting as a key cost-structure factor.

2026-11-04 07:00 GMT+8

Data center construction is evolving from a purely technical and capital issue into a political one. In an analysis following the US midterm elections in 2026, Matt Rowe, a portfolio manager at Man Group, noted that alongside the cost of living, data centers became a key battleground in this election, with opposition generating a significant backlog of projects awaiting approval. Investors are unwilling to sit on stalled projects with no revenue, and costs are beginning to reflect in financial figures.

Rowe’s core judgment is that the clarity of the regulatory framework is itself a cost-structure factor for AI infrastructure investment. He supports this argument with specific data: according to the JPM USD Investment-Grade Hyperscaler Index, as of September 14, 2026, the investment-grade credit spreads for hyperscalers have doubled from their levels in early 2025. Widening credit spreads imply rising financing costs, while equities are being repriced because actual costs are higher and timelines longer. Rowe believes that pricing these capital structures is a complex equation, and a lack of clarity surrounding revenue and profitability is consuming investors’ time and money.

Regarding specific policy templates, Rowe points to the GRID standards (Governor's Responsible Infrastructure Development) established by Pennsylvania Governor Josh Shapiro. These standards require developers to build, bring, or purchase the necessary electricity capacity so that households do not bear higher electricity bills due to data centers; developers must also cover the costs of grid upgrades themselves and engage with communities early—informing local governments, holding public meetings, and negotiating community benefits agreements. Rowe views this as a more community-oriented solution and a likely federal template for Democrats.

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In contrast, Louisiana has taken a more direct path: a law passed this year allows West Feliciana Parish, home to a large data center project, to return some revenue to residents through property tax credits starting in 2027, similar to the Alaska oil dividend model. Rowe considers Shapiro’s approach more likely to become the prevailing template.

The applicability conditions of this argument are noteworthy. Rowe acknowledges that markets generally dislike additional rules, but also notes that simply dumping data centers into residents' backyards does not work either. His judgment rests on the premise that any enterprise building a data center today will face rules from the current Congress and potentially from a president after the 2028 election; therefore, knowing roughly what those rules look like in advance is itself a form of risk management. A clear framework may prove more profitable for companies in the long run than current uncertainty. This argument holds true if the regulatory framework tends toward unification; however, if political gridlock leads to a prolonged absence of rules or continued fragmentation of state standards, uncertainty itself may become the norm rather than a transitional state.

Sources

  • man.com↗
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