(Bloomberg) — JPMorgan Chase & Co. and Goldman Sachs Group Inc. hiked the yield and sweetened terms on a $5 billion leveraged loan sale for Volta Infrastructure Holdings Ltd. as investors demand greater compensation to buy risky debt tied to the artificial intelligence boom.
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The banks have been marketing the offering for Volta, an AI cloud startup, since last week and sold it on Thursday at 6.5 percentage points above the benchmark rate and a discounted price of 95 cents on the dollar, according to people with knowledge of the matter.
That price point pushed yields up past the 11% that banks had earlier floated, rivaling the highest rates paid so far to finance the AI buildout.
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The deal also offered greater investor protections, and included structural changes that would require the borrower to pay a penalty if the debt is repaid early, one of the people said, asking not to be identified because they’re not authorized to speak publicly.
A representative for JPMorgan declined to comment, while those for Goldman Sachs and Volta didn’t respond to requests for comment.
Volta is among a group of AI companies known as neoclouds, which rent access to chips and other AI infrastructure. The company’s deal will be used to finance a data center complex in Norway that will be managed by Volta Infrastructure in partnership with Bitdeer Technologies Group, a Bitcoin miner that operates data centers.
Anthropic PBC has already signed a six-year agreement for compute capacity at the site, Bloomberg previously reported, citing people familiar with the agreement.
The loan sale immediately rankled managers of collateralized loan obligations — the biggest buyers of leveraged loans — for a number of reasons. For one, it’s unrated, which makes it harder for CLOs to buy the debt. But on top of that, it’s a large transaction from a debut borrower tapping the market at a volatile time.
Among other changes, the interest rate on the debt will change if Volta gets certain ratings, the person added.
The debt is split into two parts: a $1.3 billion term loan and a $3.7 billion chip loan. The transaction was initially pitched at spreads in the range of 6.25 to 6.5 percentage points above the benchmark rate, and a discounted price of 97 to 98 cents on the dollar.