The financing boom for AI infrastructure shows no signs of cooling down! Google-affiliated data centers lead the way as the market rushes to purchase $6.7 billion in high-yield bonds
Recently, the data center transactions supported by Google and the equity issuance by CoreWeave jointly raised $6.7 billion in high-yield bonds, demonstrating the continued enthusiasm for financing in artificial intelligence. The related transaction by Google was led by Morgan Stanley, amounting to $5.7 billion, with $19 billion in investor orders, and the funds will be used for the construction of a data center in Indiana. Despite the impact of the Middle East war on other companies' borrowing plans, Wall Street has still successfully secured hundreds of billions of dollars in funding, keeping the debt market active
The Zhitong Finance APP has noted that the financing boom in artificial intelligence is unstoppable. Recently, a record-breaking deal involving data centers supported by Google (GOOGL.US) and a follow-on sale by cloud infrastructure company CoreWeave (CRWV.US) raised a total of $6.7 billion in new high-yield bonds (junk bonds).
According to insiders, this Google-related transaction—led by Morgan Stanley and amounting to $5.7 billion—was priced on Thursday after receiving $19 billion in investor orders.
The deal will fund the construction of two data centers in a park in Sullivan County, Indiana. These data centers will be leased to cloud computing startup Fluidstack Ltd. and guaranteed by Google, a subsidiary of Alphabet.
Meanwhile, cloud infrastructure company CoreWeave sold an additional $1 billion of bonds maturing in 2031 just a week after its original issuance. The company capitalized on the sustained strong demand from investors for AI-related deals, while the ongoing war in the Middle East has stalled borrowing plans for other companies.
The rapid expansion of AI has created unprecedented shortages in data center space, GPU chips, and the power supply needed to support operations. To raise funds for all of this, companies are tapping every corner of the debt market, from junk bonds to project financing.
Although the war has caused some borrowers to pause debt sales, Wall Street has still successfully locked in hundreds of billions of dollars in funding in recent weeks. As optimism for a long-term peace agreement grows, borrowing costs for various companies have generally decreased, and issuance has rebounded.
High-risk bond yields have returned to pre-war levels.
A joint venture created by Next Frontier LLC and Fluidstack's entity, Meridian Arc HoldCo LLC, sold this new five-year note for the Indiana data centers. Data shows that this $5.7 billion bond is the largest AI-related issuance in the U.S. dollar high-yield bond market and the largest issuance led by a single Wall Street firm.
The transaction was completed just one day after formal marketing began. One insider indicated that the bond was priced at par with a yield of 6.25%, at the lower end of the price discussion range.
This scale breaks the record for high-yield bond issuance led by a single firm previously held by Morgan Stanley. The prior record was a $3.2 billion bond issued last year for cryptocurrency miner TeraWulf Inc., which was also guaranteed by Google Fluidstack assists in the development of data centers by building and operating high-performance computing infrastructure. With the rise of artificial intelligence, this business sector is thriving. The company recently announced a $50 billion deal with Anthropic to build custom data centers for the large language model manufacturer.
In August of last year, Fluidstack chose to expand its usage of a data center operated by TeraWulf in New York. Almost at the same time, Google increased its credit guarantee for Terawulf to $3.2 billion to support debt financing. The tech giant also raised its stake in TeraWulf's preparatory equity to approximately 14%
