TeraWulf Plans $3.5B Debt Raise Backed by Anthropic Lease
Digital infrastructure operator TeraWulf is seeking $3.5 billion in debt to fund a Kentucky data center leased to Anthropic for $19 billion in revenue, a massive financing that signals robust AI demand and will test institutional credit markets.
TeraWulf Inc. plans to raise approximately $3.5 billion in debt to finance a new data center campus in Kentucky. Morgan Stanley is expected to lead the financing, which will include the company's first leveraged loan alongside high-yield bonds, according to Chief Financial Officer Patrick Fleury.
The massive debt raise is fully underpinned by a newly signed 20-year lease with artificial intelligence company Anthropic. TeraWulf expects the Kentucky facility agreement to generate roughly $19 billion in revenue over its lifetime. This long-term contracted revenue is designed to support the heavy debt burden required to build out power-intensive computing infrastructure.
Wall Street analysts view the Anthropic agreement as a major catalyst for the digital infrastructure operator. Needham analyst John Todaro noted that the company secured "one of the more attractive leases in the sector, demonstrating that demand remains robust." Needham raised its price target to $33 from $28 while maintaining a Buy rating, updating its models to remove the Abernathy joint venture and add the new Justified data center lease.
Morgan Stanley's own analysts are even more bullish on the transaction's implications. Stephen Byrd raised the firm's price target on TeraWulf to $72 from $66.50, keeping an Overweight rating on the shares just a day before the debt plans were reported.
The planned financing represents a notable evolution in how TeraWulf, which owns and operates digital infrastructure across the United States, is approaching capital markets. By utilizing its first leveraged loan, the company is tapping into the institutional loan market rather than relying solely on equity raises or traditional corporate bonds to fund its expansion.
For institutional investors, the deal will test the boundaries of credit markets for AI-related real estate. Syndicating a $3.5 billion leveraged loan and high-yield bond package relies heavily on lenders' willingness to underwrite long-dated infrastructure assets based on a single tenant's credit profile. However, a two-decade lease from a prominent AI developer provides a predictable cash flow stream that traditional leveraged finance rarely sees, potentially attracting a new class of capital to the data center sector.
