NEW YORK: Goldman Sachs Group Inc is gauging investor appetite for a potential US$5.4bil debt offering to help fund a Blackstone-backed QTS data centre (DC) tied to Microsoft Corp, as bubble concerns push up costs for artificial intelligence (AI) infrastructure financings.
The offering would include about US$4.9bil of secured bonds and a roughly US$500mil term loan, according to people with knowledge of the matter.
Timing is still being discussed after a selloff in AI-tied debt, and the plans may change, the people added, asking not to be identified because they’re not authorised to speak publicly.
The proceeds would help finance a DC development in Georgia leased to Microsoft, the people said.
The planned bond would have a five-year maturity, while the loan would be due in seven years, they added.
Representatives for Blackstone and Goldman declined to comment, while those for QTS and Microsoft didn’t respond to requests for comment.
QTS has raised billions of dollars across investment-grade bonds, both public and private, as well as asset-based securities backed by DC cash flows.
Earlier this month, the company tapped the leveraged loan market with a supersized US$3.25bil financing, which was backed by a portfolio of DCs dubbed as Project Magnolia.
Nevertheless, investor sentiment toward AI financings has deteriorated over the past couple of weeks as a borrowing frenzy has been met with growing worries about whether the investments will eventually pay off.
Those concerns intensified after Alphabet Inc last week raised its 2026 capital expenditure forecast to as much as US$205bil and reported negative free cash flow in the second quarter for the first time since its 2004 initial public offering.
Earlier this week, BlackRock Inc faced tepid demand for a US$12.5bil high-grade bond sale to fund a DC tied to Meta Platforms Inc, while CoreWeave Inc was forced to sweeten terms on a US$2.6bil loan to fund additional computing capacity for firms including Anthropic PBC.
Meanwhile, spreads on outstanding debt tied to AI infrastructure have widened, making it more expensive for new issuers to raise funds.
The cost of protecting the debt of some firms against default has also risen.
The recent QTS loan has dipped to 97.75 US cents on the dollar after pricing at 99.5, according to Bloomberg-compiled data.
QTS’ debut US$4.6bil high-grade bond, which was sold in April and priced at a premium of almost 1.38 percentage point over Treasuries, has also widened to about 2.39 percentage points, according to Trace pricing data.
When selling new bonds and loans, firms typically offer a yield premium over existing debt to provide an incentive for investors to participate.
The timing of an offering may also be determined by an easing in volatility of tech debt prices more broadly. — Bloomberg
