📊 A $18 billion AI data center project bond fell into a pressured trading range on Friday.
FT reported that a roughly $18 billion loan tied to a New Mexico data center Oracle is renting was privately underwritten by a syndicate with bids at 89 to 91 cents on the dollar. “Healthy” debt typically trades near par.
This is Project Jupiter. Spanning 1,400 acres in Doña Ana County, it is the anchor project for Oracle’s $300 billion compute contract with OpenAI. Late last year, about 20 banks formed a syndicate to lend, pricing at SOFR plus 250 basis points for a four-year term. It was originally slated to go live in November this year, but data intelligence firm SynMax says it is delayed by at least seven months.
It can’t be sold easily. The reason isn’t complicated. Oracle’s own credit is deteriorating. After S&P downgraded in July, it was only one notch away from junk. Since the OpenAI contract announcement, the share price has fallen 50%. The project side is also taking hits: a natural gas pipeline needed to supply the 2.2 GW gas-powered generation units was blocked by the state land office, and the air permit was paused in August after two environmental groups filed lawsuits. Banks can only keep more of this debt on their own books than originally planned.
Local politics are the most direct factor. A poll by the Albuquerque Journal found 65% of residents oppose building large data centers, while 20% support them. Democratic gubernatorial candidate Deb Haaland said that if elected, she would halt all new data centers.
Let’s zoom out and look at this bigger. The template from 2022—debt used in crypto to buy mining machines and buy coins—has been transplanted to AI infrastructure. Lenders have switched from on-chain borrowing agreements to banks and firms like Blue Owl. Single projects have grown from the hundreds of millions to $18 billion, while the entire Stargate framework is being touted at $500 billion.
Credit market pricing usually moves earlier than equity markets.
In crypto, it’s a different kind of sentiment. When I write this, six BTC price sources are between 81,271 and 81,309, with the past 24 hours up 4.2%. AI-themed coins are leading: two TAO sources are up 9.4% and 9.7%, RENDER is up 5.6%, NEAR up 5.1%, and FET down 0.3%.
One market is marking up AI applications, while another is discounting the debt financing for AI infrastructure.
I wouldn’t treat 89 to 91 cents as a “breakdown” signal. It means buyers of the bonds are demanding higher risk compensation. Project bonds are the first to crack because their cash flows depend on a data center that isn’t finished being built and hasn’t fully received all permits yet.
Watch two things: whether Project Jupiter’s air permit and that pipeline can actually get done; and whether Oracle’s rating will drop another notch in its next review.
$BTC
#中本聪国际社区Baoluo币商资本 #AI算力 #Data center debt
FT reported that a roughly $18 billion loan tied to a New Mexico data center Oracle is renting was privately underwritten by a syndicate with bids at 89 to 91 cents on the dollar. “Healthy” debt typically trades near par.
This is Project Jupiter. Spanning 1,400 acres in Doña Ana County, it is the anchor project for Oracle’s $300 billion compute contract with OpenAI. Late last year, about 20 banks formed a syndicate to lend, pricing at SOFR plus 250 basis points for a four-year term. It was originally slated to go live in November this year, but data intelligence firm SynMax says it is delayed by at least seven months.
It can’t be sold easily. The reason isn’t complicated. Oracle’s own credit is deteriorating. After S&P downgraded in July, it was only one notch away from junk. Since the OpenAI contract announcement, the share price has fallen 50%. The project side is also taking hits: a natural gas pipeline needed to supply the 2.2 GW gas-powered generation units was blocked by the state land office, and the air permit was paused in August after two environmental groups filed lawsuits. Banks can only keep more of this debt on their own books than originally planned.
Local politics are the most direct factor. A poll by the Albuquerque Journal found 65% of residents oppose building large data centers, while 20% support them. Democratic gubernatorial candidate Deb Haaland said that if elected, she would halt all new data centers.
Let’s zoom out and look at this bigger. The template from 2022—debt used in crypto to buy mining machines and buy coins—has been transplanted to AI infrastructure. Lenders have switched from on-chain borrowing agreements to banks and firms like Blue Owl. Single projects have grown from the hundreds of millions to $18 billion, while the entire Stargate framework is being touted at $500 billion.
Credit market pricing usually moves earlier than equity markets.
In crypto, it’s a different kind of sentiment. When I write this, six BTC price sources are between 81,271 and 81,309, with the past 24 hours up 4.2%. AI-themed coins are leading: two TAO sources are up 9.4% and 9.7%, RENDER is up 5.6%, NEAR up 5.1%, and FET down 0.3%.
One market is marking up AI applications, while another is discounting the debt financing for AI infrastructure.
I wouldn’t treat 89 to 91 cents as a “breakdown” signal. It means buyers of the bonds are demanding higher risk compensation. Project bonds are the first to crack because their cash flows depend on a data center that isn’t finished being built and hasn’t fully received all permits yet.
Watch two things: whether Project Jupiter’s air permit and that pipeline can actually get done; and whether Oracle’s rating will drop another notch in its next review.
$BTC
#中本聪国际社区Baoluo币商资本 #AI算力 #Data center debt
