Meta (META.US)-related data center's first junk bond receives over four times subscription; strong demand drives premium issuance.

The first junk bond issuance for a data center linked to Meta Platforms (META.US) drew subscription demand more than four times the offering size, with attractive yields helping it lure investors. According to people familiar with the matter, U.S. data center operator CleanSpark (CLSK.US) issued its first high-yield bond tied to Meta Platforms Inc., drawing about $10 billion in orders from asset managers, while the deal was sized at nearly $2.28 billion. Another person familiar with the matter said the five-year notes were priced at 98.5 cents on the dollar to yield 8.25%. That is about 1.75 percentage points above the average for BB-rated corporate bonds tracked by Bloomberg. Amid a surge in data center financing deals and growing market concerns about excessive capital spending, investors have been demanding higher premiums for data center financing, driving up the cost of funding AI infrastructure buildouts. Earlier this year, similar financings backed by investment-grade tenants priced at yields as low as below 6%. According to a regulatory filing, the CleanSpark financing, led by Morgan Stanley, will be used to fund construction of a data center in Sandersville, Georgia. According to a CleanSpark presentation, the facility has been fully leased to Meta subsidiary Anviran LLC under a $6.6 billion, 20-year contract. The company said the data center is expected to begin operations in the fourth quarter of 2027, with Meta guaranteeing rent and operating expenses. Meta's commitment to CleanSpark gives the junk-rated borrower a predictable revenue stream to support its borrowing for the expensive project. Compiled data show that data center developers have sold more than $3 billion of high-yield bonds so far this year, most of them backed by long-term leases with hyperscalers including Oracle Corporation and Amazon.com, Inc. Las Vegas-based CleanSpark is one of a growing number of listed Bitcoin miners transitioning into data center operators to support AI applications. The company has a market value of about $3.63 billion.