JPMorgan Chase and Goldman Sachs have limited their underwriting exposure to a $5bn financing package for AI cloud company Volta Infrastructure Holdings, as investors demand higher returns on debt linked to artificial intelligence projects, according to Private Equity Wire. The report says the information was cited as being according to Bloomberg.
Underwriting structure and exposure
JPMorgan and Goldman are arranging the $5bn financing, but have underwritten only a $1.3bn term loan, leaving a separate $3.7bn loan backed by computer chips without a firm underwriting commitment, according to Private Equity Wire. The structure is described as reducing the banks’ exposure to potential losses if investor demand falls short.
Pricing and investor participation constraints
Volta’s debt is being marketed at a yield of approximately 11%, which the report places among the more expensive leveraged loan transactions used to finance AI-related investments, according to Private Equity Wire. The debt package is also described as unrated, with the report noting this may limit participation by collateralised loan obligations, which it identifies as among the largest institutional buyers of leveraged loans.
Use of proceeds and project location
The financing is intended to support Volta’s AI infrastructure development, including a data centre project in Norway, according to Private Equity Wire. The report describes the limited-underwriting structure as reflecting increasing caution around large-scale financing for AI infrastructure.
In general market practice, leveraged loans are a form of corporate debt used to finance a range of transactions and are often distributed to institutional investors, including collateralised loan obligations.
