In recent years, data centers have become a prominent infrastructure asset class, supported by artificial intelligence (AI), hyperscale cloud services, 5G, and the internet of things (IoT). The shift from on-premises IT to outsourced capacity continues to drive large-scale construction and leasing. Since our previous report on data centers and project finance (see Data Centers: Intersection With Project Finance), KBRA has rated almost $100 billion of data center-related debt. While we anticipated a substantial wave of financings, both the number of transactions and the aggregate debt issued have significantly exceeded expectations.
Recent financing has introduced additional structural features beyond those typically seen in plain vanilla transactions. Power constraints in several markets—highlighted by queue backlogs and multiyear interconnection…