Lenders are expressing concerns over data-center debt. Recently, Volta, an AI infrastructure company, sought to raise $5 billion for a data center in Norway, a deal that aligns with the over $450 billion in AI-related debt transactions completed this year. However, investors have pushed back, citing saturation in data-center debt and requesting increased security and higher interest rates. The deal is anticipated to price later this week with a minimum rate of 11%, which is considered high for a data-center project, supported by a $1.5 billion order from Apollo, according to sources familiar with the matter.
Commitments for the deal are due this week, and lenders are still negotiating allocations, meaning financing details may change. Volta's transaction serves as an indicator of the current state of AI financing. While deals continue to be executed, they are facing more challenges than earlier this year, with higher rates and more complex negotiations, according to investors and bankers.
Founded in February, Volta's Norway data center represents its first major project. Some investors expressed concerns about Volta's lack of a proven track record, while others were apprehensive regarding its dependence on Anthropic for a significant portion of the data center's computing needs. Anthropic has not disclosed much financial information to lenders, leading to uncertainty about its obligations.
To address these concerns, the deal includes a provision that allows for a reduction in the interest rate charged to Volta if Anthropic achieves an investment-grade credit rating. Reports indicate that Anthropic and OpenAI's IPO advisers are advocating for credit-rating agencies to grant them blue-chip status, a rare achievement for companies that are not yet profitable.
JPMorgan and Goldman Sachs have also secured a $1.3 billion term loan for Volta. Both banks, along with Apollo, declined to comment, and Volta and Anthropic did not respond to requests for comment.
According to a report from Morgan Stanley, September marked the second-lowest month of the year for AI financing issuance, as regulatory and political challenges impact data center construction. Analysts predict that the fourth quarter may see a further slowdown.