Last week, S&P Global Ratings gave a speculative-grade BB rating to $4.585 billion of bonds financing an AI data center near Reno, Nevada. The data center’s only tenant is an investment-grade company worth more than $3 trillion. That tenant signed a 16-year lease that it can’t end early by choice.
I wanted to know why bonds backed by a tenant that strong would get a speculative-grade rating, so I read the rating reports on every AI data center bond deal I could find from the past year. The answer has little to do with the tenant. It comes from the bond terms.
Twelve other AI data center bond deals use the same kind of terms. All 13 mature between October 2030 and October 2031.
Some of those deals have Google or Amazon guaranteeing the tenant’s lease. Others depend on a single tenant with a speculative-grade rating. Several of those deals come due within eight months of each other.
If you’ve invested in any of these bonds, or in the companies behind them, you’ll want to know which deals still cover their debt if credit conditions get worse before they mature. The full audit sorts all 13 deals by who guarantees each lease and shows how much worse lending conditions would have to get before each deal falls short. It also gives you a four-step check you can use on the next data center bond that comes to market. With it, you can tell from one rating report whether a well-known tenant protects the people lending to the project.