Google-linked data centers sell record $5.7b in junk bonds

A data center project linked to Alphabet Inc.’s Google has launched a US$5.7 billion high-yield bond sale to fund two facilities in Sullivan County, Indiana, intended to support AI computing demand.

Morgan Stanley is leading the offering, and the sites are reportedly slated to be leased to Fluidstack, a cloud-native compute startup, with back-end support from Google.

The deal is the largest US-dollar junk bond issued for a data center.

It underscores strong investor demand for AI infrastructure, even as energy and geopolitical risks add volatility.

🔗 Source: Bloomberg

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Implications, context, and why it matters.

Meet the secretive startup orchestrating AI’s infrastructure boom

Fluidstack, a cloud-native compute startup founded at Oxford University in 2017, brokers large blocks of computing capacity for leading AI labs 1.
Partners include Anthropic, an AI startup, which announced a US$50 billion American computing infrastructure deal with Fluidstack to build data centers in New York and Texas. Customers include Mistral AI, a French AI company 2, 1.
It signs long leases, including a 15-year, US$7 billion deal for 245 megawatts of IT capacity with Hut 8, a digital infrastructure operator, at the River Bend data center campus in Louisiana 3.
Google provides financial backstops for Fluidstack-related obligations in exchange for warrants, which give the holder the right to buy equity later. One set of warrants raises its pro forma ownership in operator TeraWulf, a digital infrastructure company, to about 14% tied to the CB-5 lease expansion at Lake Mariner 4.

A new financial model is emerging to fund AI’s infrastructure buildout

The bond sale signals a shift where AI companies lean on outside groups to develop and finance data centers, since building them takes large upfront capital.
A three-tier setup is taking hold. AI companies use the capacity, intermediaries like Fluidstack handle leases, and operators like Hut 8 and TeraWulf build the sites 1, 3.
Several operators are moving from crypto mining, the business of running energy-intensive computers to produce digital tokens, and they reuse their experience lining up large power supplies at former industrial sites 1, 3.
This approach can rely on project-level debt, with construction supported by a Google financial backstop 3, 5.