Data centre construction in America has driven economic booms, but completion risks now threaten bondholders. Oracle exemplifies the gap between starting and finishing these projects. A map from the Financial Times shows many mega-centres remain unbuilt, marked by turquoise dots.
Construction delays pose severe risks as "holes in the ground" generate little cash to service debt. Community backlash has led to statewide moratoriums in Texas and New York, plus local bans across 40 states. S&P Global tracks 146 delayed or cancelled projects, three quarters tied to local opposition.
Rating agencies warn that financial penalties, rent credits, and tenant termination rights for milestone delays could substantially deteriorate credit. While most projects have debt service reserve buffers for three to six month setbacks, longer delays trigger termination rights, the biggest risk for developers. Investors note that moratoriums typically spare capacity already under construction or fully permitted, but delayed projects face significant credit deterioration if rights are exercised.
Source: Financial Times Markets · Summarized by HeadlinesBriefing