ING's planned loan sale
Signs of financial unease are emerging in the US artificial intelligence data center investment market. Dutch banking group ING has decided to sell about $500 million, or approximately 670 billion won, in data center loans as a package, bringing renewed attention to financing risks for AI infrastructure projects that depend on substantial borrowing.
The loans offered for sale include debt related to Stargate, a large-scale US AI infrastructure initiative involving OpenAI, SoftBank Group and Oracle. The data center concerned is one for which Oracle issued a notice invoking a contractual force majeure clause over power supply and permitting problems, drawing close attention from financial markets.
According to reports by Bloomberg on November 5, local time, and Reuters on November 6, ING is selling about 12 data center loans through a competitive auction. Bids are due on November 19, with a minimum bid size of $10 million.
The sale includes about $25 million in loans related to Project Jupiter, a Stargate data center under construction in New Mexico. Loans related to US data center operators Vantage Data Centers and CyrusOne are also being offered.
The transaction is one of the relatively rare examples of a sale consisting exclusively of data center loans. It is expected to provide an indication of how reliably financial markets can supply the substantial funding required to build AI data centers.
However, not all of the $500 million consists of Stargate-related loans. About $25 million of the debt offered for sale is directly linked to Project Jupiter, and it has not been established that ING is selling the loans to urgently avoid losses. ING declined to comment on the transaction.
Project Jupiter's power and financing risks
Financial market concerns center on Project Jupiter, which is being developed in Doña Ana County, New Mexico. The large-scale AI infrastructure project occupies a site of about 1,400 acres and is one of Oracle's key facilities for supplying computing resources to OpenAI.
The project has reportedly secured about $18 billion, or approximately 24 trillion won, in loans. STACK Infrastructure, an affiliate of alternative investment manager Blue Owl Capital, is responsible for development.
However, power supply facilities and related permits have emerged as factors affecting the project schedule. On September 24, Oracle sent the project developer a notice invoking a force majeure clause. The company took contractual measures to protect itself regarding payment obligations in anticipation of possible delays in securing the power needed to operate the facility.
Force majeure refers to circumstances in which external events beyond the contracting parties' reasonable control delay or impede performance of a contract. According to Reuters, Oracle reportedly seeks to reduce its payment scheduling burden if the data center does not begin operating in 2028, its original target. The measure was described as not being intended to withdraw from the project itself.
Project Jupiter requires substantial power but is experiencing permitting problems related to the installation of a natural gas supply pipeline. The pipeline's completion has been pushed back to February 2027, and air quality permitting procedures for generating equipment remain outstanding.
Oracle maintains that the project is proceeding according to its planned schedule. Blue Owl also said the force majeure notice does not change the financial commitments to the multiyear project.
It would therefore be inaccurate to interpret the current situation as a suspension of Stargate or Oracle's withdrawal from the project. The central issue is that, even if the project continues, power and permitting delays could affect financing costs and the timing of investment recovery.
Signs of financial pressure on Project Jupiter emerged before ING's latest loan sale. According to a September 18 Reuters report citing the Financial Times, about $18 billion in Project Jupiter loans were being quoted at 89 to 91 cents on the dollar at that time.
This indicates that the loans could trade below face value, suggesting that investors are pricing in project delays and credit risk.
The loans were arranged through a consortium of financial institutions including Santander and Jefferies. However, reports said opposition from local residents, environmental issues and Oracle's increasing debt burden had combined to complicate the sale of the loans to other investors.
Data center project financing typically involves building a facility and recovering the investment through long-term rental income and service revenue. Delays in starting operations can therefore postpone revenue generation and affect financial institutions' and investors' plans to recover their funds.
Oracle's role as the anchor tenant supports Project Jupiter's stability, but a contract with a major technology company does not eliminate all risks associated with power supply, permitting and construction schedules. In particular, if the force majeure clause is applied and payment schedules change, responsibility for delay costs could become an important issue between the developer and financial institutions.
The implication is that financial institutions have begun examining not only AI demand itself but also contract structures and how risks from project delays are allocated more rigorously.
Market conditions and factors to watch
News of the loan sale came amid a sharp correction in US technology stocks and AI infrastructure assets. According to Bloomberg, the Nasdaq 100 index fell 6.4% on November 5, erasing about $2.3 trillion in market value. In the high-yield bond market associated with data center development, bonds linked to CoreWeave and Galaxy Digital also faced sharp downward price pressure.
The possibility of tighter regulation of data center construction following the US midterm elections was also assessed as a factor affecting investor sentiment. Growing community opposition over electricity use, water consumption and environmental impacts is increasing uncertainty over the construction schedules and costs of some data center projects.
A more fundamental issue being raised in financial markets is the gap between the scale of AI infrastructure investment and actual returns. Global technology companies are investing heavily in data centers, semiconductors and power infrastructure to meet growing demand for AI model training and inference. However, facilities take years to build, and recovering the initial investment requires stable service demand and revenue over a long period.
Costs for grid expansion, power generation facilities and environmental permits are further complicating the criteria used to assess project economics.
ING's sale does not establish that there is a market-wide credit crisis or a large-scale withdrawal by financial institutions. Nevertheless, it is attracting attention as an opportunity to observe changes in the prices and yields investors demand in the specialized market for data center loans.
A key question is the price at which ING's approximately $500 million in loans will sell. A sale close to face value could be interpreted as a signal that financial markets view data center loan risks as relatively manageable. Conversely, a substantial discount could reflect concerns over the credit risk and liquidity of the related projects.
Project Jupiter's power supply schedule and environmental permitting outcomes are also important variables. Keeping the project on schedule could ease investor concerns, while further delays could affect financing terms for other large AI data center projects.
The case shows that risks in the AI data center industry extend beyond technology development and semiconductor supply to securing power, community acceptance, contractual responsibility and financing costs.
For competition in AI infrastructure investment to continue, the ability to execute projects, bring facilities into operation as planned and generate stable revenue is expected to become important alongside access to substantial funding. In particular, delays at individual sites within megaprojects such as Stargate, which involve multiple global technology companies and financial institutions, can affect investor assessments and financing terms.
ING's loan sale does not mean Stargate is collapsing. However, it illustrates how the financial markets that have supported the expansion of AI data center investment have begun assessing project feasibility and investment recovery risks more rigorously.
Original Korean article: aitimes.kr
English brief by Korea Wind Intelligence, koreawindintel.com
