At a glance
- Floating-rate data center AAAs widened 24 basis points, to 199 over SOFR.
- Since year-end, fixed-rate data center AAAs are 60 basis points wider and floaters 32 wider, against one and seven basis points for other SASB and zero for conduit, Trepp's data show.
- The fixed-rate data center AAA benchmark went from 128 basis points at the end of June to 182 on Oct. 23, leaving a loan sized in June 54 basis points light.
Senior AAA bonds across the 19 single-asset single-borrower CMBS deals backed by data centers widened 21 basis points in the week ending Oct. 23 for fixed-rate deals, to 182 over Treasuries, according to Trepp pricing data. Floating-rate data center AAAs widened 24 basis points, to 199 over SOFR. The median senior bond in other SASB deals and in conduit deals was essentially unchanged over the same week.
Since year-end, fixed-rate data center AAAs are 60 basis points wider and floaters 32 wider, against one and seven basis points for other SASB and zero for conduit, Trepp's data show. The result holds however the bonds are averaged: weighting each bond by its class A balance gives 61 basis points of widening since year-end for fixed rate and 31 for floating rate, and the median bond gives 56 and 20.
The fixed-rate data center AAA benchmark went from 128 basis points at the end of June to 182 on Oct. 23, leaving a loan sized in June 54 basis points light. Closing that gap takes more coupon on the loan or more subordination beneath the AAA, or a smaller loan against the same collateral. That is the arithmetic a bridge lender or a fund sizing data-center paper now runs before committing.
Data-center AAAs widened 60 bp since year-end
Change in senior AAA spread since year-end, in basis points
- Data-center fixed60 bp
- Data-center floating32 bp
- Other SASB floating7 bp
- Other SASB fixed1 bp
- Conduit0 bp
Show as table
| Item | Value (bp) |
|---|---|
| Data-center fixed | 60 bp |
| Data-center floating | 32 bp |
| Other SASB fixed | 1 bp |
| Other SASB floating | 7 bp |
| Conduit | 0 bp |
A summer drift, then a sell-off
Fixed-rate data center bonds had been drifting wider since early summer, from 128 basis points at the end of June to 161 by Oct. 16. Over the same months the median fixed-rate senior bond in other SASB deals went from 122 to 133. Floaters widened with the rest of the market in March, peaked at 183 basis points against 177 for other SASB floaters, and were back at 176 by mid-October. On Oct. 21 alone, 39 of the 88 rated data center bonds were marked wider.
The sell-off came the next day. On Thursday, Oct. 22, the PHLX Semiconductor Index fell 6.7% on worries about AI spending and chip supply chains, and CoreWeave slid on a Bernstein downgrade and fresh questions about how it will finance its expansion. CoreWeave, which Private Wealth Daily previously reported has brought the majority of 22.5MW live at atNorth, has some bonds trading at yields of 15% or more, according to Trepp. The 10-year Treasury yield fell 17 basis points that day to 4.96%, its biggest one-day drop since March 2023. Morgan Stanley strategists said this week they expect spreads on data center asset-backed securities to keep widening.
Reported by the Real estate debt desk from Trepp. Published . Corrections