A consortium of banks led by Morgan Stanley is preparing to refinance $15bn of debt tied to a Google-backed data centre in Texas leased to Anthropic, underscoring how the unprecedented financing demands of the artificial intelligence boom are reshaping capital markets.
Wall Street banks are preparing to transfer $15bn of debt linked to a Google-backed data centre campus in Hubbard, Texas, into the bond market, reflecting the evolving financial architecture underpinning the rapid expansion of artificial intelligence infrastructure. According to the Financial Times, the move comes as major lenders become increasingly reluctant to retain large AI-related infrastructure loans on their balance sheets while demand for financing continues to accelerate.
The refinancing involves a consortium of banks led by Morgan Stanley, which committed funding for the 2,000-acre data centre campus currently under construction in Texas. People familiar with the matter said the banks intend to refinance the debt through the bond market as soon as the underlying loans are drawn. The strategy is designed not only to secure long-term capital for the project but also to enable banks to reduce their AI-related risk exposure and preserve lending capacity for future transactions.
The Financial Times reported that the bond market has emerged as an increasingly attractive source of funding for large-scale AI developments. Its depth allows projects requiring vast amounts of capital to obtain long-term financing more quickly and often at a lower cost than traditional bank lending. As investment in AI infrastructure expands, this shift is also easing pressure on banks whose balance sheets have been stretched by a growing pipeline of technology-related financing.
The strain has become particularly evident in the infrastructure lending market, which has traditionally financed projects such as airports and gas pipelines. That market is now grappling with the enormous capital requirements generated by AI data centres. Earlier this year, major Wall Street banks spent months seeking buyers for more than $50bn of construction debt linked to several Oracle-leased data centre projects, while some lenders have also pursued risk-transfer arrangements to manage their exposure.
The $15bn financing package for the Hubbard project is expected to be divided into several bond offerings because the underlying bank loan includes a delay-draw feature. This allows Nexus Data Centers, the project developer, to access funding progressively as specified construction milestones are achieved. According to people familiar with the matter, a portion of the financing may also be refinanced through the leveraged loan market.
Despite Google’s financial backing, the proposed bond is expected to receive a speculative-grade rating because the company’s support becomes effective only after the data centre has been fully completed. Investors would therefore assume construction-related risks, including potential delays and cost overruns, during the development phase.
The facility will ultimately house Google’s custom TPU chips, which will be financed separately. It will also operate using its own natural gas power plant, a decision intended to avoid delays and rising costs associated with securing electricity from an increasingly strained grid. The concentration of planned data centre developments across Texas has heightened concerns over pressure on electricity and water supplies, as well as the prospect of higher utility prices.
Combining data centre infrastructure with dedicated power generation introduces further complexity for financiers, requiring lenders to assess two distinct categories of project risk simultaneously. The Financial Times noted that Project Walleye, a comparable Meta-led data centre incorporating behind-the-metre power generation, offered investors additional yield to compensate for these added risks.
The Financial Times first reported Google’s financial support for the Texas project in March, while The Wall Street Journal subsequently reported on aspects of the financing. Nexus Data Centers and Morgan Stanley declined to comment. Anthropic and Google did not respond to requests for comment.
