Nebius secures $3.5bn Citi loan to fund AI data center expansion amid rising costs
Amsterdam-based AI cloud provider Nebius has secured a $3.5 billion loan from Citi to finance data center construction and GPU acquisitions. The 364-day facility, priced at Term SOFR plus 2.75%, addresses rising compute costs and investor scrutiny of neocloud debt. Nebius executives assert the company maintains a healthier balance sheet than rival CoreWeave, leveraging over $40 billion in long-term contracts to support future borrowing capacity.
Key points
- Nebius, an Amsterdam-based AI cloud company, signed a $3.5 billion secured loan facility with Citi, which serves as the lead arranger, to fund data center development and GPU purchases.
- The 364-day loan carries an initial interest rate of Term SOFR plus 2.75%, with the margin potentially increasing to 3.50% based on specific adjustments.
- Ophir Nave, Nebius's chief operating officer, stated the financing optimizes long-term capital costs, while Marc Boroditsky, chief revenue officer, emphasized the company's distinct debt profile compared to rival CoreWeave.
- Nebius supports its financial strategy with over $40 billion in long-term contracts from investment-grade customers, alongside customer prepayments and operating cash flow, to back future asset-backed borrowing.
- The deal responds to market concerns about neocloud sustainability, following CoreWeave's rising default insurance costs and Nebius's recent share price decline, as AI compute prices continue to rise.
Nebius, an AI cloud infrastructure provider headquartered in Amsterdam, has finalized a $3.5 billion loan facility with Citi to accelerate its expansion into artificial intelligence compute resources. The secured facility, which runs for 364 days, will primarily finance the construction of new data centers and the procurement of graphics processing units. Citi, acting as the lead arranger, structured the loan with an initial interest rate set at the Term SOFR benchmark plus 2.75% annually, a margin that may adjust upward to 3.50% depending on specific financial conditions.
The financing move comes as investors increasingly scrutinize the capital intensity of "neocloud" providers. Market sentiment has been affected by rising costs for insuring the debt of competitors, such as CoreWeave, whose default risk premiums recently spiked to levels typically associated with financial distress. In response, Nebius executives have sought to differentiate their financial position. Marc Boroditsky, the company's chief revenue officer, told CNBC that Nebius is not carrying the same volume of debt as its peers, while Ophir Nave, the chief operating officer, described the current facility as a strategic step to optimize long-term capital costs.
Beyond the immediate Citi loan, Nebius is positioning itself for future growth by leveraging its extensive customer base. The company holds more than $40 billion in long-term contracts with investment-grade clients, which can serve as collateral for additional asset-backed borrowing. This strategy, combined with customer prepayments and internal operating cash flow, aims to sustain Nebius's expansion despite the rising costs of AI hardware and the volatile nature of the tech sector's debt markets.
Sources
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