Blue Owl shopped debt for a CoreWeave data center. Lenders weren't sold.

Core Insights - Blue Owl Capital is facing challenges in securing financing for a $4 billion data center project in Pennsylvania, which it is co-developing with CoreWeave, a rapidly expanding AI cloud computing service provider [1][2][3] Financing Challenges - The lack of lender interest in the Lancaster project is attributed to growing caution regarding AI companies with lower credit ratings, as CoreWeave holds a below-investment-grade rating of B+ from S&P Global Ratings [3] - A senior executive from a specialty lender indicated that they chose not to participate in the financing due to these concerns [3] Project Status - A spokesperson for Blue Owl stated that the Lancaster project is already under construction and is "fully funded, on time, and on budget," although it remains unclear if Blue Owl is solely funding the construction [7] - If Blue Owl cannot secure debt financing, it may face significant cash outlays for the project's construction [7] Market Context - The situation highlights the complexities and risks associated with financing infrastructure for AI computing, with analysts expressing concerns over the ability to raise debt for such projects [8] - Recent reports indicated that major banks struggled to sell off $38 billion of debt for two data center campuses anchored by Oracle, reflecting broader market hesitance [9][10] Strategic Partnerships - CoreWeave has committed to leasing 100 megawatts of capacity at the Lancaster data center, with potential expansion to 300 megawatts, and plans to invest up to $6 billion in the project [10] - In August, Chirisa Technology Parks announced a partnership with Blue Owl and Machine Investment Group to provide $4 billion in funding for the construction, separate from CoreWeave's investment [11] Innovative Financing Approaches - Blue Owl has been recognized for its creative financial strategies in the data center boom, including a previous partnership with Meta that raised $27.3 billion in investment-grade corporate bonds [12] - There are potential avenues for Blue Owl to explore alternative financing structures, such as leveraging the credit of investment-grade customers or pooling loans from institutional investors [13]