Data center operator TeraWulf Inc. (NASDAQ: WULF), having recently completed a landmark high-yield bond offering, is now exploring the leveraged loan market to fund its artificial intelligence infrastructure build-out. The company's Chief Financial Officer, Patrick Fleury, stated in an interview that the firm is collaborating with banks, including Morgan Stanley, to develop loan products. While TeraWulf's next financing round will likely be another high-yield bond, "it could also be a loan," he noted.

Approximately eight months ago, TeraWulf issued $3.2 billion in high-yield bonds to expand a data center in New York, marking the largest junk bond deal led by Wall Street institutions, with Morgan Stanley again leading, in over three decades. Technology companies are tapping every corner of the credit market to meet the unprecedented funding demands of AI, pushing Wall Street to design new debt structures to keep pace.

Initial Steps in the Market

Fleury explained that "TeraWulf and many of its peers are actively working with banks to develop these products," adding that "the foundational structure is largely in place; the market is just waiting for more deals to establish a precedent." This precedent emerged in late April when CoreWeave launched the first leveraged loan backed by contracts with GPU clients like OpenAI. That $3.1 billion loan attracted roughly $19 billion in investor orders.

Expanding Capital Sources

Fleury pointed out that connecting with loan investors also opens a pathway to the collateralized loan obligation (CLO) market, which is the largest buyer of leveraged loans. "This opens up a significant, entirely new source of capital for the industry," he said. The company, which is transitioning from Bitcoin mining, has been expanding its data center footprint, recently acquiring a high-performance computing development site in eastern Kentucky.

Financing Evolution

"Given the scale of capital required to build HPC infrastructure, expanding the available financing toolkit is a crucial step for the industry's maturation," Fleury stated. The company's $3.2 billion high-yield bond issued last October—the first such deal by a cryptocurrency miner—was aimed at partially funding the expansion of a data center at the Lake Bonneville campus in New York. That transaction, which attracted over $11 billion in investor orders, was bolstered by so-called "backstop support" from Google's parent, Alphabet, which will guarantee the debt once the facility is operational.

"As more deals come to market and investors become more familiar with this asset class, the financing terms evolve," Fleury said. "I believe we will see similar gradual development in the leveraged loan market as more issuers utilize this product."