Goldman Sachs is assessing investor interest for a speculative-grade bond offering of approximately $1.15 billion. The proceeds from this bond sale would fund a data center near Richmond, Virginia, which is being developed by PowerHouse Data Centers and Chirisa Technology Parks, with equity contributions from Blue Owl Capital funds. This data center will be leased long-term to CoreWeave, an AI cloud company, making CoreWeave's leases the primary basis for repayment for the bond investors.
The bond sale is anticipated to launch in September, but sources familiar with the discussions indicate that plans are still fluid. The deal emerges in a market where investors have grown more cautious and are demanding higher yields for debt related to AI infrastructure, following a surge of issuances earlier this year. CoreWeave's speculative-grade credit rating contributes to higher borrowing costs compared to projects backed by more established cloud providers like Alphabet.
This trend of increasing borrowing costs is evident in recent transactions. For example, subsidiaries of QTS Realty Trust, backed by Blackstone, recently sold $3.9 billion in investment-grade bonds at yields typically associated with junk debt. Additionally, last month, Galaxy Digital had to offer a 10% yield to attract buyers for a $3.5 billion bond product that was also backed by a CoreWeave lease. The success and pricing of Goldman's $1.15 billion bond for the Digital Drive project will be a key indicator for the future cost of financing in the AI data center sector.
