Key insights
- Cipher Digital's planned $810 million junk-bond sale to finance an Amazon-leased data center highlights the significant role of debt markets in funding AI infrastructure. This demonstrates how large tech companies' long-term leases enable substantial financing for new projects, potentially signaling continued investment and growth in the AI and data center sectors, which could be a positive indicator for related technology equities.
Investing.com -- Cipher Digital Inc. plans to raise $810 million through a junk-bond sale to help finance a data center leased to Amazon.com Inc.
The funds will cover remaining construction costs for Cipher’s Stingray Facility, a computing data center in West Texas that Amazon will lease under a 15-year contract, according to Bloomberg News, citing a person with direct knowledge of the matter.
The transaction highlights how junk-debt markets are financing AI infrastructure linked to large technology companies such as Amazon and Alphabet Inc. Long-term leases signed by these tech companies on data centers built by smaller firms have enabled billions of dollars in financing for new projects.
Cipher Digital, previously called Cipher Mining due to its cryptocurrency mining background, last accessed the market in February. The company raised $2 billion to fund its Black Pearl data center in Texas in a deal that drew more than $13 billion in orders.
Morgan Stanley (NYSE:MS), Goldman Sachs Group Inc. (NYSE:GS), Wells Fargo & Co. (NYSE:WFC), Banco Santander SA (BME:SAN), and SMBC Nikko Securities Inc. are managing Cipher’s new offering.
The bond sale takes place on the same day Amazon is marketing at least C$7 billion ($5 billion) in Canadian dollar bonds.
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