The next phase of data centre growth - and the role of high yield capital

This is an article from our Q3 Active Fixed Income Outlook 

The data centre sector is rapidly evolving from a US-dominated market into a truly global investment theme, driven by rising AI demand and constraints on power and infrastructure in traditional US locations.

For investors, this matters. Not only is the opportunity set broadening geographically, but the way these assets are financed is also changing – with the global high yield (GHY) market playing an increasingly important role.

A structural shift in where capacity is built

The globalisation of data centres reflects the growing need to build faster and at greater scale. As a result, developers and hyperscalers are looking beyond just the US.

Regions stepping in include:

• The Nordics, offering abundant, low-cost renewable 
energy and faster build timelines
• The Gulf, where sovereign-backed projects are delivering 
AI infrastructure at scale
• Asia Pacific, where cloud adoption and digital infrastructure investment are accelerating rapidly

The marginal growth in capacity is now increasingly non-US, marking a structural shift in the industry.

Data centre financing is increasingly moving into the high yield market. Polar DC’s €800 million issuance in June[1] was the first pure-play data centre project deal in European high yield. This trend is accelerating – later in June, CoreWeave, a US
based AI infrastructure company, issued its first European high yield bond, raising €2 billion at an 8.5% coupon.[2]

A new opportunity set

For high yield investors, data centres represent a relatively new sector – and one that requires careful analysis given:

• These are infrastructure-like assets, requiring a different 
underwriting approach

• Debt structures can be bespoke and evolving

• There is some market concern around technology exposure, particularly given broader AI-driven disruption

However, these factors are also creating potential opportunities:

• Market caution – particularly towards lower-rated issuers – means borrowing costs remain elevated compared to BB & B-rated issuers where funding costs are at historical lows. Combined with strong funding demands, this can create attractive entry points.

• From a structural perspective, many of these bonds also offer appealing characteristics including shorter maturities, amortisation as cashflow ramps up and clear refinancing catalysts once assets are operational.

Market concern around AI is focused on longer-term outcomes – whether in equity valuations or infrastructure ownership models. High yield instruments, by contrast, often sit earlier in the lifecycle, where completion and refinancing are the key 
drivers. This difference in timescales can easily be overlooked, but the implication is clear: the outcome for the high yield bonds can be distinct from the question of ultimate profitability and direction of AI.

This is where the relative value case is compelling: we believe data centre high yield bonds can offer a meaningful yield premium versus comparable BB/B industrial credit. We believe that premium partly reflects a market still learning how to price 
the sector, creating potential mispricing for investors able to underwrite the collateral, contracts and refinancing path.

A disciplined approach to a fast-growing sector

Our high yield team views the globalisation of data centres as a significant and evolving opportunity within high yield. According to Barclays Research, data centre issuance within high yield has increased significantly from zero 12 months ago 
to more than $130 billion in June. 

We take a global view of capital allocation across regions, applying disciplined credit selection, with an emphasis on risk mitigation and lastly combining high yield and infrastructure expertise to assess these assets appropriately.

The data centre build-out is becoming a global endeavour, and the GHY market is increasingly helping to fund it.

While still an emerging sector within public credit, we believe it offers strong structural demand, tangible asset backing and attractive yields. Importantly, those yields may be less correlated to sectors more directly exposed to AI disruption, 
such as software, providing a potential diversifier in returns. For investors willing to navigate the complexity, we believe this is a space where selectivity and a global perspective can unlock compelling risk-adjusted results.

[1]. H.I.G Capital, 1 June 2026.
[2]. CoreWeave, 11 June 2026.