Home / Business and Economy / Applied Digital Raises $1.59B in Junk Bonds
Applied Digital Raises $1.59B in Junk Bonds
11 Jun
Summary
- Applied Digital priced $1.59B in junk bonds for CoreWeave's capacity.
- Bond yield dropped to 7% from 10%, indicating easing market concerns.
- Investor demand for AI infrastructure credit shows significant strength.
Applied Digital has secured $1.59 billion through the issuance of senior secured junk bonds, facilitated by APLD ComputeCo 3 LLC. These funds are earmarked for augmenting CoreWeave's computing capacity in North Dakota. The bonds were priced to yield 7%, a marked decrease from the 10% yield demanded in November for an earlier phase of the same project.
This development suggests a potential easing of market concerns surrounding debt linked to CoreWeave's data center operations. Investor appetite for AI infrastructure credit appears to be strengthening, as evidenced by a reduction in the cost to protect CoreWeave debt against default. Data center developers have now collectively raised over $8 billion via high-yield bond sales for CoreWeave-leased projects.
The capital infusion will support the construction of the fourth building at Applied Digital's Polaris Forge 1 campus, adding 150 megawatts of IT load for CoreWeave under a long-term contract. A portion of the bond proceeds will also be utilized to repay an existing Goldman Sachs bridge loan, underscoring the financial maneuvering involved in this expansion.
