economy
Cipher Digital raises $810 million in junk bonds to build another Amazon data centre in Texas
Cipher Digital is raising $810M in junk bonds at 6.25% to fund its Stingray data centre in West Texas, leased to Amazon under a 15-year contract.
TL;DR
- Cipher Digital is raising $810 million in junk bonds to fund a 100-megawatt data center in West Texas for Amazon.
- The facility, named Stingray, will be leased by Amazon for 15 years, with construction financing provided by the bond sale.
- Cipher Digital has shifted from cryptocurrency mining to high-performance computing infrastructure, holding contracted HPC capacity with Amazon Web Services, Google, and Fluidstack.
- The bond offering features an unusual amortization schedule tied to project cash generation, similar to project finance.
- This deal is part of a broader trend of tech giants utilizing high-yield debt markets for AI infrastructure financing, often by leasing facilities from specialized developers.
- The debt market for AI infrastructure is described as "two-track," with hyperscalers issuing investment-grade bonds and smaller companies accessing the junk market.
- Investor demand for AI infrastructure exposure is high, as evidenced by oversubscription in previous bond sales by Cipher's subsidiaries.
- The long-term, triple-net leases with investment-grade counterparties like Amazon mitigate the risk associated with these high-yield instruments.