JPMorgan Chase & Co. and Goldman Sachs Group Inc. have taken a rare step to limit their exposure on a $5 billion loan sale for AI startup Volta Infrastructure Holdings Ltd., as investors demand higher yields for risky debt tied to the AI boom. The banks are leading the loan offering but have underwritten only a $1.3 billion term loan, while a $3.7 billion chip loan remains unwritten to protect themselves from potential risks. Volta’s debt carries an 11% yield, one of the highest in the leveraged loan market, and the transaction is unrated, which typically excludes it from CLO purchases.
Lenders usually underwrite entire debt packages to reassure borrowers, but are now adopting less conventional structures due to AI deal risks. Banks remain wary after suffering losses from hung debt in 2022 during rapid rate hikes. Volta, founded earlier this year by former Brookfield executives Ricard Boada and Sofia Gumuzio, aims to ease access to Nvidia chips for AI labs and startups.
The $1.3 billion term loan will fund lease payments to Bitdeer Technologies Group for a Norwegian data center, while the $3.7 billion chip loan will finance ~36,000 Nvidia GPUs. Anthropic PBC has already secured a six-year compute agreement at the site. Commitments for the deal are due October 14.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing