Some Money for AI Data Centers is Getting Tighter

Billions of dollars are still flowing into the U.S. data center buildout; two areas are tightening, and that’s worth nothing.

Construction of AI data centers is still accelerating, but funding is getting tighter. Investors are asking private credit funds for more cash than they can pay out, and long-term borrowing costs have climbed since summer.

Investors asked to pull $13.8 billion out of 19 non-traded business development companies in the third quarter, 11.5 percent of the funds’ estimated net asset value, according to an Oct. 2 report from Robert A. Stanger & Co., a Shrewsbury, N.J. investment advisory firm.

That was down from 12.7 percent in the second quarter. The funds met about 40 percent of the requests and left an estimated $8.2 billion unmet, compared with 37 percent and $9.8 billion in the second quarter.

“Requests remain backlogged and persisting at several of the largest funds, but the decline in overall demand is encouraging,” said Kevin T. Gannon, Stanger’s chairman and CEO, in the firm’s report. Stanger said redemption demand may have peaked in the second quarter.

New money is slowing too. Business development companies raised $17.0 billion through August, down 60 percent from $43.0 billion a year earlier, Stanger reported Sept. 23. Fundraising across all credit strategies fell 47 percent, to $38.7 billion.

Stanger singled out two Blue Owl funds. Requests at Blue Owl Technology Income Corp. reached 39 percent of shares outstanding in the third quarter, up from 38.1 percent in the second. At Blue Owl Credit Income Corp., requests were 16.8 percent of shares, down from 18.8 percent.

Borrowing costs rose at the same time. The 10-year Treasury yield closed at 5.24 percent on Oct. 9, up from 4.48 percent on July 1, according to Treasury Department data. It reached 5.31 percent on Oct. 5.

Data center borrowers are paying up. On Sept. 18, a CleanSpark subsidiary priced $2.276 billion of senior secured notes at 98.5 percent of face value with a 7.875 percent coupon to finance its Sandersville data center, according to the company. Selling the notes below face value raises the effective cost of the debt above the coupon rate.

The construction numbers show no slowdown. Data center construction spending rose 7.5 percent in August and is up more than 73 percent from a year earlier, according to an Associated Builders and Contractors analysis of Census Bureau data released Oct. 1. “Frankly, it’s becoming difficult to contextualize the size and speed of this boom,” said ABC chief economist Anirban Basu.

CBRE reported Sept. 8 that a record 7,481 megawatts was under construction across North America’s eight primary markets in the first half of 2026, with more than 80 percent of it already preleased and vacancy holding at 1.4 percent. That leaves less than 1,500 megawatts available for preleasing, which CBRE said equals roughly six months of supply at the current pace of demand. “Occupiers and capital sources that secure power early are the ones closing deals,” said Stu Dyer, an executive vice president in CBRE’s data center solutions group.

Demand for data center space and the pace of construction both read strong. The money behind them is getting more expensive, and private credit investors are still waiting in line to get out. The next test comes when the hyperscalers report third-quarter results and update their capex guidance.