Nvidia Signs Lease for 200-MW Nevada Data Center Funded by $3.8B Junk Bonds

Nvidia has agreed to lease capacity at a new data center campus in Storey County, Nevada, designed to provide about 200 megawatts of IT power and including a dedicated substation. The facility’s development is being financed in part through a roughly $3.8 billion issuance of high‑yield (junk) bonds arranged by a sponsor backed by asset manager Tract Capital. Rather than deploying large upfront capital to build and own the site, Nvidia will secure long‑dated leased capacity — a structure that accelerates access to GPU‑dense infrastructure while preserving balance‑sheet flexibility. The bond package monetizes the predictable cash flows from a hyperscaler‑style lease and transfers a substantial share of execution, interconnection and occupancy risk to fixed‑income investors who accept non‑investment‑grade credit exposure for higher yields. This structure mirrors a broader evolution in the sector: developers and sponsors are increasingly tapping private credit, structured bond deals and bespoke securitisations to match long‑duration data‑center cash flows with investors seeking yield and duration. That expanded investor base — which includes insurers, pension funds, private credit managers and specialty debt desks — helps underwrite rapid AI infrastructure deployment but concentrates exposure to a small set of large tenants and to sector‑specific operational risks. Key operational constraints for the Nevada project include permitting timelines, interconnection and transmission upgrades to support the additional load, and the timing of equipment deliveries; delays in any of these areas could pressure bond servicing. For bondholders, the credit profile will hinge on lease covenants, rent‑step structures, occupancy guarantees, reserve mechanics and the legal priority granted to bond claims. Regulators and rating agencies are increasingly focused on sponsor leverage, tenant concentration and the durability of contracted cash flows for deals of this type. Comparable market moves — from private‑credit facilities backing multi‑gigawatt buildouts to chip‑and-capacity financing arrangements — underscore that the sector’s financing playbook is diversifying beyond traditional bank loans and equity. If well‑structured with robust covenant protection and alignment between lease maturities and bond terms, the transaction could become a replicable template to speed capacity additions; if protections are thin, it could prompt re‑pricing in high‑yield and structured‑credit markets. Locally, Nevada utilities and regional grid operators will need to coordinate on transmission and substation work to avoid bottlenecks that could delay energization. Observers should watch the finalized lease length, credit enhancements, defaults and remedies language, reserve funding, and whether the sponsor layers other credit wraps or liquidity facilities to support early operations.