Data centre firm DayOne seeks to boost loan to record US$7bil

2026-03-18 - 03:30

AI-related data centre spending could reach US$2.9 trillion between 2025 and 2028, with roughly half requiring external financing, which is driving debt issuance, according to Morgan Stanley. (Freepik pic) SINGAPORE: DayOne Data Centers Ltd. is seeking to double the size of an existing loan to as much as US$7 billion, according to people familiar with the matter, in what would be the largest borrowing for the sector by any firm in Asia. The deal size would be a leap from the original US$3.4 billion-equivalent facility, as the Singapore-based company, once an international affiliate of Chinese data centre operator GDS Holdings Ltd., looks for additional funding to expand its operations in Malaysia. It would also add to the mountain of debt these companies are taking on to power their AI ambitions, even as some investors grow anxious about the potential impact. Talks are ongoing and details of the deal could change, said the people, asking not to be identified discussing private matters. DayOne’s funding plans underscore how the artificial intelligence boom remains a key driver of debt deals in the Asia-Pacific region, fueling a wave of big ticket financings. Blue Owl Capital-owned data centre company Stack Infrastructure Inc., for example, is seeking an about A$3 billion loan (US$2.1 billion) to finance a new project in Melbourne. AI-related data centre spending could reach US$2.9 trillion between 2025 and 2028, with roughly half requiring external financing, which is driving debt issuance, according to Morgan Stanley. CoreWeave Inc., one of the leading data centre operators in the US, plans capital spending of US$30 billion to US$35 billion this year, and has pushed its long-term borrowings to more than US$14 billion as it builds capacity for customers like Microsoft Corp. and Meta Platforms Inc. Lenders are willing to provide billions because revenue is often assured for a decade or longer to investment-grade tenants like Microsoft, Alphabet’s Google, or Amazon, providing a steady cash flow to service the debt. Still, the scale of the lending has sparked concerns on Wall Street about whether the industry will be able to deliver sustainable returns despite all the cash pouring in. DayOne’s “amend and extend” loan initiative would include tranches in US dollars and ringgit, with the increased facility maturing in 2030, the same as the original borrowing, some of the people said. The exercise gives borrowers access to fresh capital without structuring a new deal, allowing them to tap existing lenders while incurring minimal fees. DayOne declined to comment. Formerly known as GDS International, the company was set up by GDS Holdings to manage its data centre assets and operations outside mainland China. It later brought in international investors including SoftBank Vision Fund, Coatue Management, Ken Griffin, and Baupost Group. The firm was rebranded as DayOne and launched as an independent group early last year. In August, DayOne said it was expanding into Finland with an investment in a data centre there, according to a company press release. Separately, DayOne is also mulling a US initial public offering targeting a valuation of as much as US$20 billion.