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AI Boom Fuels European Data Center Debt Deals
8 Jan
Summary
- European data centers are set to see significant debt deals soon.
- AI's growth is driving demand for data center capacity globally.
- Securitization is becoming a key financing tool for European data centers.
The escalating demand for artificial intelligence is driving a substantial increase in the need for data center capacity. Consequently, Europe is preparing for a significant influx of debt-backed securities tied to its data center infrastructure, aiming to align with the US market's rapid development.
Analysts project that at least five European data center issuers will bring asset-backed or commercial-mortgage-backed securities to market in 2026, potentially totaling €3-€5 billion. This trend marks a notable expansion for Europe's securitization market, which has seen limited activity compared to the US, where issuance exceeded $15 billion last year.
While Europe strives to catch up in AI infrastructure, challenges such as stringent regulations and the considerable energy requirements of data centers persist. Investors must also consider risks like technological obsolescence, operational issues, and the significant power demands of these facilities, as underscored by a recent major outage at a CyrusOne campus in Illinois.
