De-risking construction unlocks cheaper data center debt
The guest argued that de-risking data center project execution can secure investment-grade credit ratings during construction, significantly lowering the cost of capital.
The argument
Typically, data center developers must rely on expensive short-term bridge loans during construction before refinancing post-stabilization. Hut 8 bypassed this by securing investment-grade ratings from S&P and Fitch on day one of their Riverbend project due to highly de-risked execution plans and creditworthy counterparties.
The thesis, stress-tested
✓ What validates it
- ✓Closing of low-cost, long-duration debt facilities for future projects
- ✓Replication of day-one investment-grade ratings on new builds
▸ Risks discussed
- ▸Construction delays or cost overruns could damage credit standing
- ▸Counterparty risk if hyperscaler credit profiles deteriorate over the 15-year term
Hear it yourself
"Like, we we want it to be in countries, that are more on in in the West. And so maintaining compute in The US, we think, is kind of critical to national security. Separately is from an AI compute perspective. So these two loads are very different. AI compute is more bursty, more based on workloads, and kind of a traditional data zone that they consume and is less price sensitive. Where Bitcoin, you trade around price volatility. And so these are interesting loads that can actually work together because one doesn't have to be online all the time and one does."
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