Volta Infrastructure’s roughly $5 billion leveraged loan slipped past its expected pricing deadline on Wednesday, Oct. 14, as investors weighed its attractive double-digit yield against concerns over graphics processing unit-backed lending and mounting caution over AI-related exposure.
Pricing on the unrated AI infrastructure developer’s inaugural 6.5-year loan was being offered at SOFR+625-650 bps and 97-98 OID for both the $1.3 billion term loan C and $3.712 billion GPU term loan. JPMorgan is lead left on the deal, which launched on Oct. 2. Commitments were due Oct. 14 and as of publishing the deal has not priced, sources noted.
Volta’s deal is oversubscribed, according to a source, but is awaiting pricing as accounts have asked for further changes. At a roughly 11% yield, one investor described the deal as “super yieldly,” but said there was some uncertainty given Volta is a new issuer and the first financing to bring Nvidia’s Vera Rubin chips to market.
The company’s lack of history was a concern for several investors who pointed to the size of the financing relative to Volta’s limited operating track record, lack of audits and experience. The bulk of the new loan is slated for GPU purchases, effectively funding “an aggressive growth plan” and is relying on those assets to generate enough cash to pay down the debt quickly, an investor said. The company emerged from stealth in August, led by two former Brookfield Infrastructure executives.
The deal comes amid elevated scrutiny of AI infrastructure financings, with recent secondary weakness in credits such as CoreWeave prompting some investors to reassess their exposure to the sector. CoreWeave’s unsecured notes are trading in distressed territory, with some issues at or below 80 cents as of this morning, as reported.
While some “spooked” investors are maintaining caution around data center-related deals, another investor said CoreWeave falls in a separate category from other names and that each loan and bond deal in the sector is bespoke.
JPMorgan and Goldman Sachs, two of the bookrunners, only underwrote the $1.3 billion term loan C financing the company’s letter of credit for its Norwegian data center lease, according to news reports, with the $3.7 billion GPU financing lease not underwritten by banks. Semafor reported Apollo had committed $1.5 billion to the transaction.
The offering was launched after a substantial period of premarketing that saw over $4 billion in demand come from a handful of asset managers. Volta was unrated in the primary market, making it difficult for CLOs to invest in the loan offering, raising questions around why the offering hit the broadly syndicated market, according to sources.
The second investor also flagged liquidity, questioning how deep the secondary market would be for an “unusual, unrated structure,” and who would buy the paper if they wanted to exit. The concern isn’t whether AI demand will keep growing but what the economics look like a few years down the road, he said. A long-term contract provides some comfort but lenders still have to account for the risk that the AI buildout doesn’t play out as expected.
In a steadier market the deal would be more attractive, added the first investor, but with markets going “haywire,” buyers need to be well compensated to take the risk.
Octus Private Company Analysis’ review on Volta can be found HERE.
JPMorgan declined to comment.
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