Hut 8 announced the closing of a $4.25 billion offering of 6.129% senior secured notes due 2042 to finance the development of its Beacon Point data center project in Texas. The transaction marks the company’s second investment-grade data center construction bond and brings cumulative project-level investment-grade financing to $7.5 billion.
The notes were issued by wholly owned subsidiary Beacon Point DC LLC and received a Baa2 rating from Moody’s, representing an improvement over the BBB- ratings assigned by S&P Global Ratings and Fitch Ratings to Hut 8’s River Bend financing completed earlier this year. The offering was substantially oversubscribed and attracted both existing and new institutional investors, further expanding the company’s credit investor base.
Proceeds from the financing will support the development and construction of a turnkey data center consisting of six data halls with a combined 352 megawatts of critical IT capacity. The facility will be built on approximately 521 acres in Nueces County, Texas, and will be leased to a tenant with an AA- or higher credit rating. The proceeds will also fund construction of an associated substation, debt service reserves, and transaction expenses.
Hut 8 said the financing structure is fully amortizing, non-recourse to the parent company, and non-dilutive to shareholders. The company expects no equity issuance to fund the project and noted that the structure eliminates refinancing risk at the project level while allowing Hut 8 to maintain zero recourse debt on its balance sheet.
The notes priced at Treasury plus 165 basis points, 20 basis points tighter than the spread achieved in the River Bend transaction. According to Hut 8, the financing represents the largest, highest-rated, and tightest-priced investment-grade bond issued to date for a single-sponsor data center construction project.
The company believes the success of the transaction demonstrates the repeatability of its financing model and supports its longer-term objective of achieving an investment-grade corporate profile. Together with the River Bend financing, the transaction establishes a framework for accessing investment-grade capital markets during the construction phase, a milestone rarely achieved before commercial operations begin.
Support: J.P. Morgan served as lead bookrunner for the offering, while Goldman Sachs acted as a bookrunner.
KEY QUOTES:
“The investment-grade market has historically not been available to finance project-level data center construction. Together with our River Bend offering, this Offering establishes the ability of our data center projects to access investment-grade financing markets and demonstrates a repeatable model for funding construction-stage development. We believe this structure, which eliminates refinancing risk and protects shareholder value, can support a durable competitive advantage as we continue to scale.”
Asher Genoot, CEO of Hut 8
“The hallmark of this financing model is repeatability. What enables us to deliver superior outcomes over time, however, is rigor of execution. Each term of the Offering was structured from first principles rather than inherited from the prior offering. Beacon Point improves on River Bend across key financing metrics, including rating and spread. We intend to bring that same discipline to future transactions.”
Sean Glennan, CFO of Hut 8
