JPMorgan Dangles 11% Yield on Volta’s $5 Billion AI Loan Sale

(Bloomberg) -- JPMorgan Chase & Co. is pitching a yield of about 11% on a $5 billion leveraged-loan sale on behalf of Volta Infrastructure Holdings Ltd., one of the highest borrowing costs seen in the market for risky debt that's become popular for financing the AI boom.

The loan transaction for the new artificial intelligence cloud company is being marketed 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, according to a person familiar with knowledge of the matter. That equates to a yield of roughly 11% at current benchmark levels, according to a Bloomberg calculation.

Purchasing the specialized chips needed to run AI models is an expensive endeavor. Companies backed by investment-grade firms can tap the high-grade markets and achieve lower borrowing costs, such as the $35 billion debt package backstopped by Broadcom Inc. used to help Anthropic PBC access tensor processing units, or TPUs, an AI chip developed by Broadcom and Alphabet Inc.

But smaller, riskier companies without such partners, especially so-called neoclouds that rent access to chips and other AI infrastructure, are instead turning to the more expensive leveraged loan market. A string of deals by CoreWeave Inc., Lambda Inc. and Crusoe Inc. have proven that these lenders are happy to finance such purchases.

But those earlier transactions came at lower borrowing costs. The Volta deal, which is more than just a chip loan and also includes debt to support a data center, marks a new high in terms of all-in yield.

Representatives for Volta and JPMorgan, which is leading the transaction, declined to comment.

The transaction will be used to finance a data center complex in Norway that will be managed by Volta Infrastructure in partnership with Bitdeer Technologies Group, and Anthropic has already signed a six-year agreement for compute capacity at the site, according to people familiar with the matter.

Volta was founded earlier this year by Ricard Boada and Sofia Gumuzio, two former executives from Brookfield Asset Management Ltd.'s infrastructure business. Bitdeer is a Bitcoin miner that operates data centers.