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In a world that's increasingly interconnected and complex, making the right decisions can be challenging. This is especially true for the data centers sector, where both opportunities and risks abound.
That's where Moody's Ratings comes in.
As a leading global provider of credit ratings, research and risk analysis, we can help you navigate through turmoil and market volatility.
Publications
Policy and water risks limit data center boom despite abundant renewable energy
Data centers are expanding significantly in Latin America's most concentrated areas of demand for cloud computing and 5G networks, and more recently demand for artificial intelligence (AI), including Brazil (Ba1 positive), Mexico (Baa2 negative), Chile (A2 stable) and Colombia (Baa2 negative).
Data Center Securitizations | Rating Methodology
This methodology applies to data center asset-backed securitizations (ABS) globally. In data center securitizations, the underlying collateral typically consists of the issuer's equity interest in one or more special purpose entities (SPEs, or asset entities) that either own or lease the data centers, as well as the asset entities' rights under the related tenant leases. The main source of repayment for the securities is the tenant lease payments generated from the data centers' operations.
REITs are poised to navigate emerging tech risks as data center demand persists
As news of artificial intelligence (AI) developer DeepSeek rattled the market in recent days, it was clear that the nascent AI industry and data center owners were contending with a potentially disruptive development, although we expect that data center demand will continue to grow.
2025 Outlook – Developer leverage, regulatory risk to rise as growth surges
Demand for data center capacity to support artificial intelligence (AI), cloud computing and data storage services will intensify in 2025.
Data center value chain will require more than $2 trillionto power the digital economy over the next five years
Large capital investments made today to support rapid growth through 2028will not be repaid for another 15-20 years.
Asia’s rapid data center growth broadens to new markets, driven by geopolitical concerns
Asia-Pacific (APAC) will likely be the fastest-growing market for data centers1 over the next five years, as rising computing demand fuels expansion globally . Telecommunication companies and real estate companies are best positioned to tap into data center growth in APAC, in addition to the hyperscalers that build and lease the largest share of capacity.
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Tenant demand for data center REIT properties will stay strong for at least five years
Demand for data center capacity will remain strong for at least the next five years, helping real estate investment trusts (REITs) Digital Realty Trust, Inc. (Baa2 stable) and Equinix, Inc. (Baa2 stable) to grow their portfolios and uphold key credit metrics.
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Data center demand will raise credit risk for utilities without regulatory, contractual protections
Data center growth will boost revenue but creates planning challenges. In areas of the US with strong data center growth prospects, vertically integrated regulated utilities can benefit from higher revenue as demand increases.
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Big tech spending surges on data center buildout
Vast computational power needed to drive advances in artificial intelligence is creating a surge in demand for data centers to process and store the data. The leading cloud services providers or "hyperscalers" like Amazon, Google, Microsoft and Meta are building and leasing new data center capacity to ensure they have room for what they expect will be exponential future demand. Other tech firms that sit at the cutting edge of AI technology are doing the same.
Rapid capacity growth to serve surging computing demand poses long-term risks
The growing digital economy, rising demand for cloud services and data storage and the massive computing needs of AI and cryptocurrencies will continue to fuel demand for global data center capacity over the next five years.
Electric Utilities and Power Companies – US: Data center growth poses opportunities and credit risks for power providers
Over the last two decades, US power demand has remained relatively flat. But rising baseload power consumption from the proliferation of data centers is poised to increase overall power demand, potentially straining the electric grid in certain regions.
Talen Energy - Cumulus data center sale and associated power purchase agreement are credit positive
On 4 March 2024, Talen Energy Supply, LLC (Talen, B1 CFR stable) announced the sale of its 960 MW Cumulus data center campus to Amazon.com, Inc. (Amazon, A1 stable) for $650 million.
Amazon's $5 billion Querétaro investment offers spillover benefits for data providers
On 26 February 2024, Amazon Web Services (AWS), a subsidiary of Amazon.com (A1 stable), announced plans to launch an infrastructure region in Mexico's central state of Querétaro (Baa2 stable) by early 2025. AWS is planning a $5 billion (MXN85 billion) investment in Mexico over the course of 15 years.
Data centre operators share traits with REITs but credit challenges differ
The number of data centres in Australia (Aaa stable) will likely grow at an annual rate of 4.5% through 2026, drawing interest from REITs and other investors which have been increasingly looking to gain exposure to this segment.
Data center securitization grows, posing credit risks unique to the nascent CRE property type
An increasing number of commercial mortgage-backed securities (CMBS) loans backed
by data centers in recent years presents varying degrees of credit challenges unique to the
relatively nascent commercial real estate (CRE) asset class.
Rising demand boosts prospects for US data center REITs
Strong demand for data center storage will boost revenue and earnings for the three US data
centers REITs that we rate, Digital Realty Trust Inc. (Baa2 stable), CyrusOne Inc. (Ba3 positive)
and QTS Realty Trust, Inc. (B1 stable). These REITs will continue to have large development
pipelines, but preleasing and good capital access will mitigate most of the credit risk.
Events and Podcasts
21 Jan 2024
2025 Data Centers Outlook
Join us for this webinar exploring the 2025 outlook for data centers. Our panel of analysts will delve into key trends, opportunities, and potential risks in this rapidly evolving sector.
Register here4 Dec 2024
Outlook for private investment in US transportation infrastructure post the elections
Join us for a webinar with Project Finance analysts and Mark Zandi, Chief Economist at Moody's.
Register here
13 Nov 2024
Data centers and power: Intersection of digitization and decarbonization risks
Join us for a webinar, where our expert Project Finance analysts will convene to explore the growth of data centers, alongside the risks and opportunities they present.
Watch webinar
17 Oct 2024
Data Center Securitizations: Proposed Rating Methodology
In this webinar, analysts from Moody's Ratings will discuss the Request for Comment on a proposed new methodology for rating and monitoring Data Center asset-backed securitizations (ABS). We invite you to join our speakers as they provide an overview of the key risks and the proposed analytical framework.
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17 Jul 2024
Huge demand for data centers right now masks underlying credit risks
We forecast growing demand for cloud services, the adoption of new AI products and cryptocurrencies will see investment in new data center capacity exceed $2 trillion globally over the next five years.
Listen podcast
30 Apr 2024
Data centers
Development risks increase amid rapid growth to meet rising computing demand.
Watch webinarWhy Moody’s Ratings?
Clear and robust analytical framework
Our comprehensive methodologies that span Data Centers provide a transparent and rigorous framework for assigning credit ratings. They explain our approach to assessing credit quality while also providing insights for market participants into how various factors – both qualitative and quantitative, including ESG risks - may affect rating outcomes. Access the links below to learn more.
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