NEW YORK: A US$16bil financing for a giant Oracle Corp data centre in Michigan has wrapped after months of stop-and-start negotiations with investors.
Bank of America Corp sold US$14bil of bonds tied to the project, in a debt sale that was anchored by Pacific Investment Management Co (Pimco), according to a statement by the data centre developer Related Digital.
Pimco bought about US$10bil of the bonds that priced last Friday, while other investors bought the remainder of the debt, according to sources.
The debt is part of a larger US$16bil financing package that will fund the data centre in Saline Township in southeastern Michigan. Oracle is the tenant and aims to use the campus to power applications for OpenAI, Bloomberg has reported.
The financing includes equity from Related Digital and funds affiliated with Blackstone Inc.
The latter contributed about US$2bil of the equity, Bloomberg previously reported.
The bonds were sold privately in a 144A offering, meaning they can only be bought by large institutional investors, the people said.
The notes, which mature in 2045, were priced at 98.75 US cents on the dollar and carry a 7.5% coupon, according to some of the sources and Bloomberg-compiled data.
Related Digital, a venture of New York-based property developer Related Cos, said the project will play a critical role in America’s digital future.
The protracted process involving the project in Michigan’s Saline Township shows how Big Tech’s debt-fuelled artificial intelligence (AI) splurge is running into more intense scrutiny from Wall Street.
The Saline Township campus will include three single-story data centre buildings with more than a gigawatt of capacity.
The project is being developed for Oracle as part of its partnership with OpenAI to expand AI compute capacity across the country.
The biggest technology companies are pouring hundreds of billions of dollars into data centres and other infrastructure as they bet AI will reshape large parts of the economy.
Much of that money is coming from debt markets. — Bloomberg
