Banks Lend $18 Billion for Oracle-Tied Data Center in New Mexico

Core Insights - A consortium of approximately 20 banks is providing around $18 billion in project finance loans to support the construction of a data center campus associated with Oracle Corp, highlighting the significant financial backing for the artificial intelligence sector [1][5] - The data center in Doña Ana County, New Mexico, is part of the Stargate project, which aims to invest $500 billion in AI infrastructure across the U.S., with Oracle expected to be the primary tenant [3][5] - The financing deal involves major banks such as Sumitomo Mitsui Banking Corp, BNP Paribas, Goldman Sachs, and Mitsubishi UFJ Financial Group, which are acting as administrative agents and will syndicate the debt to other banks and institutional investors [2][4] Financing Details - The loan pricing is being discussed at 2.5 percentage points above the Secured Overnight Financing Rate, with a maturity period of four years and options for two 12-month extensions [4] - Blue Owl Capital is providing equity for the transaction, while BorderPlex Digital Assets and STACK Infrastructure are involved in the development of the data center facilities [3][4] Market Context - There is a surge in debt issuance as companies seek funding to meet the growing demand for new data centers, which are essential for powering AI products like OpenAI's ChatGPT [6] - Morgan Stanley projects that capital expenditures on AI could surpass $3 trillion over the next three years, indicating a robust growth trajectory for the industry [6]