Goldman Sachs is exploring investor appetite for a speculative-grade bond offering, estimated at $1.15 billion, to fund the construction of a data center that will be leased to AI cloud firm CoreWeave Inc. The offering is anticipated to hit the market in September, although these plans are currently fluid.
The data center project, known as Digital Drive, is located near Richmond, Virginia. It is being developed by PowerHouse Data Centers, a division of American Real Estate Partners, and Chiripa Technology Parks, with equity funding from Blue Owl Capital funds. CoreWeave has secured long-term leases for the space, which underpins the bond sale.
This financing initiative comes at a time when investors are demanding higher yields on debt associated with AI infrastructure. Earlier this year, a surge in such offerings led to a more cautious market. CoreWeave's lower credit rating compared to top-tier cloud providers like Alphabet contributes to the increased borrowing costs. This trend was evident last month when Galaxy Digital had to offer a 10% yield for a $3.5 billion bond product backed by a CoreWeave lease. The success of Goldman's $1.15 billion bond sale will serve as a key indicator of the current market sentiment for AI infrastructure financing.
