[Seohak!Star] IREN Completes $3.65 Billion 'Investment-Grade' GPU Financing... Supported by MS AI Cloud Contract

IREN (Nasdaq: IREN) announced on the 1st (local time) that it has completed a total of $3.65 billion in investment-grade graphics processing unit (GPU) financing to support the fulfillment of its artificial intelligence (AI) cloud contract with Microsoft (MS).

This transaction is evaluated as having achieved the highest level of investment grade among publicly announced GPU financings. It is also drawing significant industry attention as it marks the first GPU financing transaction made in the US private placement market.

Financing Secured at an Average Rate of Around 6.0%, Including Interest Rate Hedging

The detailed structure of this financing consists of a $2.1 billion US private placement issuance and a $1.55 billion delayed draw term loan (DDTL).

Looking at the interest rate terms, the $2.1 billion private placement was financed at a fixed rate of Secured Overnight Financing Rate (SOFR) + 2.13%, while a floating interest rate of SOFR + 2.25% was applied to the $1.55 billion DDTL. The company also entered into interest rate hedge contracts to manage the risk of interest rate fluctuations.

IREN explained that the average borrowing cost of this financing is around 6.0%. This is a significant achievement, especially considering it was accomplished in an environment where the benchmark interest rate has risen since the initial loan commitment.

Achieves 'A' Rating from Fitch and 'A(low)' from Morningstar

The credit evaluation for this transaction was conducted based on Microsoft's long-term purchase agreement (offtake agreement). As a result, credit rating agency Fitch assigned an 'A' rating, and DBRS Morningstar assigned an 'A(low)' rating. Thanks to the financial structure designed with GPU assets and the contract-based cash flows generated from those assets as collateral, along with the securing of investment-grade credit ratings, the company was able to attract funds from a broad range of institutional investors.

The raised funds will cover $5.59 billion, which accounts for about 96% of the total $5.81 billion GPU investment cost required to fulfill the Microsoft contract. In particular, if customer upfront payments are included, the overall financing cost drops to an average of 3.31%.

Underwritten by Goldman Sachs and J.P. Morgan... "Targeting 480MW Deployment by 2026"

Goldman Sachs and JPMorgan Chase participated as joint lead underwriters and bookrunners in this transaction, with a diverse group of institutional investors—including global financial institutions, asset managers, and insurance companies—taking part in the investment.

IREN is currently pushing to expand its AI cloud business, aiming to build a total of 480 megawatts (MW) of AI cloud capacity by the end of 2026. The company expects this financing to serve as a key foundation supporting its future growth strategy.

Co-founder and co-CEO Daniel Roberts stated, “Being able to raise funds on investment-grade terms is a result that reflects the excellence of our customer contracts and the fact that we directly own the data center infrastructure where the GPUs operate.” He added, “This structure will help improve access to institutional investor capital and lower the cost of capital during the business expansion process.”

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