Data center asset-backed securities (ABS) are a relatively new and growing asset class that is attracting attention from capital market participants. Investors are exploring data center ABS as an opportunity to gain exposure to the digital economy.
In this Insights, Tiago Duarte-Silva, Ana Balcárcel, and Keith Czerney discuss how credit rating agencies are adapting their rating methodologies to accommodate data center idiosyncrasies. Data center ABS tend to have strong credit ratings and competitive yields, positioning data center ABS as an appealing alternative to traditional fixed-income investments.
The sector’s ability to maintain its growth will depend on effective management of power availability, construction reliability, and tenant diversification. Financing structures that fail to tackle these challenges may encounter increased borrowing costs and decreased investor interest.
Read more about the risks, yields, and ratings of data center ABS here.
