The market still supports AI: Google data center builder to issue $5.7 billion in junk bonds, setting a historical record!

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Amid trade friction and macroeconomic uncertainty clouding the market, enthusiasm for AI infrastructure financing remains undiminished.

According to a Thursday report by Bloomberg, a data center project associated with Alphabet-owned Google is seeking to issue $5.7 billion in junk bonds to fund the construction of AI infrastructure, setting a historical record for similar deals in the U.S. junk bond market. The deal is solely underwritten by Morgan Stanley, which began a roadshow this Wednesday and is expected to price as soon as this week.

The funds raised from this bond issuance will be used to build two data centers in Sullivan County, Indiana. The facilities will be leased to cloud computing startup Fluidstack Ltd. and will be credit-backed by Google. This structure demonstrates that tech giants are continuing to support AI computing power expansion through diversified debt instruments, with strong market demand for such assets persisting.

The Largest Data Center Junk Bond in History Debuts

According to Bloomberg data, the $5.7 billion issuance is not only the largest U.S. data center junk bond to date but also the largest high-yield bond deal in history to be solely underwritten by a single Wall Street institution. Morgan Stanley thereby breaks its own previous record.

The bond is issued by a joint venture between Next Frontier LLC and Fluidstack, with the official issuer name being Meridian Arc HoldCo LLC. The bond has a term of five years.

Morgan Stanley’s previous sole underwriter record was from a high-yield bond deal by cryptocurrency mining firm TeraWulf Inc., which was also credit-backed by Google. This new record reflects the rapid expansion of financing for AI data centers.

Fluidstack: The Builder at the Center of the AI Computing Boom

As the primary operator in this transaction, Fluidstack focuses on the construction and operation of high-performance computing infrastructure, with its business rapidly expanding alongside the AI wave. The company recently announced a $50 billion partnership with leading model developer Anthropic to build custom data centers, further establishing its key position in the AI computing supply chain.

Last August, Fluidstack expanded its use of TeraWulf’s data center operations in New York. Meanwhile, Google increased its credit backing for TeraWulf to $3.2 billion and boosted its estimated equity stake in TeraWulf to about 14%. These actions show that Google is systematically building out external computing resources through both equity and debt channels.

The AI Arms Race Drives a Surge in Debt Financing

The rapid expansion of AI has caused widespread shortages in data center space, GPU chips, and power supply. To fill this gap, related companies are turning broadly to the debt markets—from junk bonds to project financing, financing tools are becoming increasingly diverse.

The closing of this $5.7 billion deal will serve as an important test of investor risk appetite toward data center debt assets. In the current market environment, Google’s credit backing is undoubtedly a key factor in attracting buyers, and to some extent provides a relatively visible margin of safety for high-yield bond investors.

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