Andrea

🦔Someone wants out of roughly $500 million in data center loans at once. Bloomberg reports an unnamed seller put a dozen loans up for bid, including a $25 million piece of OpenAI’s Stargate site in New Mexico, plus debt tied to big operators Vantage and CyrusOne. It’s one of the first auctions made up only of data center debt. The sale comes two days after the midterms, and Texas’s incoming Democratic governor has already called for an immediate halt on new data center construction. My Take I wrote about that New Mexico site in September. Oracle, the tenant, sent the developer a force majeure notice there, which is the legal clause a company uses to say events outside its control may let it off the hook. I’d sell a loan on that project too. Bloomberg didn’t name the seller and I won’t guess, but picking this week looks deliberate to me. The rest of the market isn’t helping. The Nasdaq 100 fell as much as 6.4% today, and junk bonds tied to data center builders like CoreWeave took some of the worst hits. Loans like these normally trade in private, so outsiders rarely see a price. On Nov. 19, when bids come due, we get one. A steep discount would force every lender with similar paper to mark theirs down too, and I’d bet more sellers line up after that. Hedgie🤗

🦔The Nasdaq is down about 4.8% this morning and the S&P 500 is off about 3.2%. That puts the Nasdaq more than 10% below its October 6 record, its second correction this year. Chip stocks took the worst of it, with AMD down about 11%. My Take The bill for the subsidized growth phase came due today. For months Alphabet and Amazon burned through cash and Oracle’s debt drifted toward junk prices, all to keep buying GPUs. Token prices have since fallen hard and Anthropic’s growth slowed, so the market can finally see that a lot of this spending won’t turn into profit anytime soon. More scrutiny of data centers from the new Congress adds risk that people waved off during the boom, and lenders like Ares already refuse to finance GPUs. I suspect the market now treats compute like a regular industrial expense that has to earn its keep. A lot of 401(k)s hold these names through index funds, and I wouldn’t make big decisions in the middle of a drop like this. Hedgie🤗