Blue Owl’s Stack is pursuing a $5.9 billion loan, contributing to the surge in debt for AI data centers.

      Stack Infrastructure, the data center division of Blue Owl, the private-credit powerhouse, is reportedly seeking a loan of approximately $5.9 billion, according to Bloomberg. Should this deal succeed, it would rank among the largest single financings in a sector that has become crucial for AI development.

      Blue Owl has positioned itself as a key player in this market. Through Stack and various partnerships, it has emerged as one of the leading private financiers of the data centers necessary for AI, contributing to a wave of borrowing that now totals in the hundreds of billions of dollars.

      This new loan follows closely on the heels of a previous one. Stack secured $2.1 billion just this February, and the climb to nearly $6 billion in just months reflects the rapidly increasing demand for both capacity and debt.

      The financing structure reflects current trends. Instead of using cash to fund data centers, companies have increasingly turned to borrowing against the assets and long-term contracts that support them, a strategy that disperses the substantial costs among investors seeking higher yields.

      Blue Owl is actively participating in this transition. It has facilitated tens of billions in funding for large-scale projects, including major facilities associated with Meta, placing private credit in areas where traditional banks have become more hesitant.

      The scale of investment has shifted dramatically. Individual AI campuses now require tens of billions for construction, amounts that exceed what any single bank is willing to lend, thereby granting private-credit firms like Blue Owl a more significant role than they held only a few years back.

      This caution has its reasons. Data center debt's security is directly tied to the demand it relies on, and several high-profile setbacks, including a problematic deal linked to Oracle, have underscored for lenders that the AI boom carries genuine credit risks beneath the surface enthusiasm.

      Oracle required PIMCO to support a $16 billion financing after banks withdrew, and infrastructure funds from Blackstone to Brookfield are making investments that would have seemed extravagant just two years ago.

      Lenders are making a straightforward bet. Compute resources are limited, the companies that lease them are among the wealthiest globally, and the contracts supporting these structures can last a decade, which positions the loans as relatively safe bets on paper.

      However, there is a risk that this proposition is self-reinforcing. Much of the demand arises from AI companies that are still operating at a loss, and some of the debt is being backed by chip manufacturers who have their motivations for sustaining the expansion, closely intertwining the fortunes of the industry.

      Blue Owl's size affords it a flexibility that banks do not possess. As a private credit manager, it can hold loans that regulated lenders might avoid, and it has capitalized on this advantage as the AI infrastructure sector has grown.

      Currently, the $5.9 billion figure is based on Bloomberg’s reporting and has not yet materialized into a finalized deal. The terms, pricing, and specific assets involved will influence market reception, and large data center loans have experienced both successful and troubled outcomes in recent months.

      What remains clear is the overarching trend. The financial resources needed to develop AI have surpassed available balance sheets and are increasingly being addressed through borrowed funds, with Stack’s latest endeavor representing another step on the industry's ascent.

      Each of these loans represents a bet on a shared future. If demand for AI remains steady, the debt offers an attractive opportunity against a stable asset; if demand decreases, both the properties and the debt will appear more burdensome than they do today.

      For Blue Owl, the calculation continues to be made. The firm has determined that funding the essential components of the AI boom is the most secure way to benefit from it, and the $5.9 billion loan represents its latest effort to maintain a leading position in the market.