00:00U.S.-based data center operator Prime Data Center is delaying a planned $500 million Nordic bond
00:05sale. Bloomberg learning that some investors said they would not participate in the sale
00:09under the proposed terms. Bloomberg's Eleanor Duncan has been following the story and she
00:13joins us now from London. So, Eleanor, do we understand, do we know what the proposed
00:18terms are that investors are not happy with? We don't know yet, but I think it's interesting
00:25because obviously we've seen there is massive demand for data centers across the globe.
00:30And to that extent, they are tapping all parts of the debt market right now. We've seen a
00:35lot of these deals in the U.S. dollar market. And now I think what's interesting is that
00:39they're coming to the Nordic bond market, which is not a very familiar territory for high-yield
00:44bond investors. So, we saw the first deal earlier this year in, I think, May, Polar DC, which
00:50raised an €800 million euro bond there. And now we're starting to see signs of indigestion,
00:57which is quite interesting because we haven't seen many of these deals. So, with Prime DC,
01:03they originally came to the market with a $600 million bond. They later sent word out that
01:09they were going to downsize that to $500 million. And then later, they postponed the deal for
01:16the time being, according to our sources. So, we're not sure what exactly the terms were.
01:24We understand that Prime DC might be coming back with potentially better terms. But I think overall,
01:32it's interesting because, yeah, the Nordic bond market, not super familiar territory for European
01:37high-yield bond investors. For the data center guys, they need lots of cash. So, they're looking
01:43to the Nordic bond market because it's quicker and it's cheaper because you need less documentation
01:49requirements and you don't need a credit rating. Okay. So, that makes it more attractive. And we
01:54know these data center operators, all the AI-related businesses are in a desperate cash raising mode
02:02right now. So, they'll go wherever they can get it. What can you tell us here about the reception
02:08from investors going forward to other issues from companies that do similar businesses? I mean,
02:15is this company, Prime Data Centers, special in any way in the pushback it's gotten?
02:23I don't think so. I think, to be honest, the response to a lot of these deals has been fairly
02:28mixed.
02:30So, the banks that are marketing them are companies like Pareto and Arctic Securities.
02:36They're not your usual, you know, big Wall Street banks like Goldman Sachs and JP Morgan who have the
02:42balance sheet to support these kind of deals. I think what is notable is that we're seeing much
02:47larger deals than the Nordic bond market is used to. So, for example, Pure DC is floating
02:53a one billion dollar, sorry, one billion euro bond, which is very unusual for this size,
03:00I think, for this market. I think with investors, they, you know, these companies are different from,
03:07say, like the investment grade hyperscalers of the world. These are the data centers, they're burning
03:12cash. It's very speculative. They need to build the data centers in order for the tenants to come.
03:19And I think a lot of high-yield investors are just not comfortable taking that risk.
03:23Although some are very excited to get involved in the AI boom too, of course.
Comments