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Nvidia in talks to guarantee debt for Nscale's West Virginia data center

For a credit officer lending to data-center projects

Nvidia is in talks to guarantee billions in debt financing for Nscale's planned Anthropic data center in West Virginia, The Information reported on Thursday, and Bloomberg later corroborated the report, according to TechCrunch.1

The arrangement would help Nscale secure financing for the electricity and construction costs of the campus, according to TechCrunch's account of the reporting; neither Nvidia nor Nscale has been quoted confirming the talks in the sources provided.1 Under a residual value guarantee, Nvidia would step in if Nscale defaulted on construction payments, temporarily take over the facility, and help find a buyer and new tenant, according to The Information.1

Anthropic has signed a $44.6 billion contract for the project's first building alone, according to Nscale's IPO filing; the contract covers a 460-megawatt building expected to use Nvidia's Vera Rubin chips.12

TechCrunch reported that the companies are also discussing a second deal worth roughly $45 billion for another building. The article does not say which companies are in those talks beyond "the companies" and gives no terms for that deal.1

Nvidia's earlier support for cloud providers has mostly covered leases and chip purchases, not construction. The Information reported that Nvidia has extended roughly $170 billion in investments and credit support to neoclouds and large customers, including $1 billion in convertible financing committed to Nscale in September.1

Anthropic filed to go public this week, but Blackstone has warned investors that Anthropic may receive a below-investment-grade credit rating after its IPO, TechCrunch reported.1

Why it matters

Lenders to AI data center projects may be asked to rely on a chipmaker's takeover-and-resale promise rather than a payment guarantee, so credit teams should read the terms closely. The backstop is only as strong as Nvidia's ability to find a new tenant, and the current tenant's possible junk rating adds risk.

From the brief

Our take. The guarantor sells the chips, the tenant may be rated junk, and the borrower runs about 25,000 of a planned 500,000 chips. Your committee should price the guarantee as Nvidia protecting a sale, not your loan.

Action. Credit risk: For single-tenant data-center loans, confirm whether vendor guarantees cover principal or only takeover and re-leasing, and stress-test tenant downgrade scenarios.

What our records say

NVIDIA designs GPUs and AI systems and sells them with a licensed software stack that banks run in their own data centres or rent in the cloud, and its bank customers include BNY, Capital One, PNC, Santander and Deutsche Bank.1 BNY: BNY became the first major bank to deploy a DGX SuperPOD with DGX H100 systems (Mar 18, 2024).2 The SuperPOD supports deposit forecasting, payment automation, predictive trade analytics and end-of-day cash balances.3

  1. NVIDIA: AI programme summary (part 1)
  2. NVIDIA: BNY deploys a DGX SuperPOD
  3. NVIDIA: Forecasting and trade analytics on a DGX SuperPOD (Trading & capital markets)

From our records

Sources

  1. ReportNvidia weighs playing the cosigner for Nscale’s AI data center in West Virginia | TechCrunch TechCrunch
  2. Primary sourceS-1 SEC