A company developing a $12 billion data center in West Feliciana Parish is selling $3.25 billion worth of bonds to finance the project.
Miami-based Hut 8 is developing an artificial intelligence data center in St. Francisville with a $10 billion price tag for its first phase. The company announced earlier this week it has priced the bonds at $3.25 billion, aligning itself with a growing trend of data centers developers using debt financing to fund the large-scale developments.
Hut 8 did not return a request for comment.
Hut 8 DC LLC, a wholly owned subsidiary of the company, will issue the bonds. The bonds will also help reimburse the company for investments made in the facility, set aside money for any potential debt and pay for fees associated with the bonds, according to a release.
The bond offering closesd on Thursday. The notes will have a 6.192% per annum interest rate and will mature in 2042.
Credit rating agency Fitch Ratings expected to rate the bonds at BBB last week, meaning the company is expected to be able to repay its debts with a low risk for default. Hut 8 made $235.1 million in revenue last year with 45% year over year growth, according to a proxy statement filed with the Securities and Exchange Commission.
Building and running AI data centers is a capital heavy task, with billions spent on construction and more needed to fund the technology inside of it. Consulting firm McKinsey & Company estimates that spending on data centers could run up to $7 trillion by 2030.
Companies producing AI technology have largely been funding the development themselves, but a $1.5 trillion funding gap has emerged in the rapid progression of the AI boom, according to Morgan Stanley, which is where investors come into play. Companies producing AI data centers including Alphabet and Oracle Corp. have used also bonds to finance data center projects.
Construction delays and weak financial performance are some of the biggest risks for companies producing AI infrastructure and technology, both hindering developers’ ability to repay debts used to finance the projects.
AI company Fluidstack will provide the River Bend data center capacity to Anthropic, known for its Claude chatbot, in a 15-year $7 billion deal, with Google providing a financial backstop. Through 2042, Hut 8 expects to spend $5.3 billion on the data center, with $83 million for construction in 2027 and the rest toward repaying the bonds and interest, according to a Hut 8 investor presentation. The tenants will fund the roughly $10 billion worth of computers in the data center.
The bond offering is the latest development in the data center, which is expected to complete its first phase of construction by the end of the year. Last month, West Feliciana Parish officials inked a water improvement deal with Hut 8 stating that the company will fund new water main infrastructure to avoid disrupting the parish’s water supply.
The data center’s operations are expected to begin in the second quarter of 2027.
