DoubleLine Briefing: Investing in Data Center Asset-Backed Securities.
In a new research paper, Stephan Diaz Ellinghaus, a Specialist on DoubleLine’s Asset-Backed Securities (ABS) team, and Client Portfolio Manager Phil Gioia, CFA, find in data center ABS “high-yielding investment opportunities with modest risk.”
The paper, “Securitizing the Digital Present & Future: Investing in Data Center Asset-Backed Securities (ABS),” can be accessed here: https://doubleline.com/wp-content/uploads/Securitizing-the-Digital-Present-and-Future_October-2024.pdf
Data centers provide critical infrastructure, Messrs. Diaz and Gioia write,
To support the technologies that are now critical to people’s everyday lives.
These include emerging technologies such as machine learning, virtual reality, augmented reality and artificial intelligence as well as established ones, for example, email, messenger, streaming and social media.
Securitization, the authors note, is a rapidly growing avenue for the financing of data center assets. Primary-market issuance is “on track to hit record issuance in 2024, with more than $8 billion expected. The total data center ABS market outstanding could reach $50 billion by 2027, up from $25 billion in 2024.”
DoubleLine, they write, is finding compelling opportunities in data center ABS throughout the capital structure. Subordinate and mezzanine tranches at present “offer the most attractive risk-adjusted return profiles. Like the senior tranches, the subordinate tranches are generally resilient to stress cases and benefit from the same industry dynamics and sticky client base and have more attractive spread and yield.”
READ the latest news shaping the data centre market at Data Centre Central
DoubleLine Briefing: Investing in Data Center Asset-Backed Securities. source
