Nebius is seeking to raise $4.5 billion through convertible bonds to construct AI data centers.

      On Wednesday, Nebius Group announced its intention to raise $4.5 billion through the sale of convertible bonds, which will be used to construct data centers for artificial intelligence. The Amsterdam-based company detailed this plan in a statement.

      The offering is divided into two parts: Nebius is issuing $2.75 billion in notes maturing in 2030, and a second series worth $1.75 billion maturing in 2034. These bonds are being sold privately to large institutional investors, who have the option to acquire an additional $675 million within 13 days of the initial issue. This extra allocation consists of $375 million in the 2030 notes and $300 million in the 2034 notes.

      According to Nebius, the funds will support the expansion of its business, which includes the construction and enhancement of data centers and the development of its AI cloud platform. The financing will also cover the acquisition of essential components, including the graphics chips that are crucial for AI systems.

      Regarding terms and market response, the bonds are convertible, allowing holders to exchange them for Nebius shares under specific conditions instead of solely receiving cash repayment. The 2030 notes are said to have a coupon rate of 0 to 0.5 percent, while the 2034 notes are expected to have a 4 to 4.5 percent rate. Bloomberg reported that Nebius anticipated pricing the offering later on Wednesday.

      Four banks—Goldman Sachs, JPMorgan, Citigroup, and Bank of America—are facilitating the sale, as noted by Bloomberg. Representatives from Goldman Sachs, Citigroup, and Bank of America declined to comment, and Nebius and JPMorgan did not respond to inquiries.

      The share price reacted sharply, with Nebius stock declining up to 9.2 percent in US premarket trading on Wednesday, following a significant 197 percent increase this year through Tuesday’s close.

      The notes will be senior, unsecured debts of Nebius, providing interest payments biannually. The company stated that it cannot call either series early before 2028, except under specific tax changes. It also indicated that it could settle conversions with cash, shares, or a combination of both, at its discretion.

      In addition to the new bonds, Nebius mentioned that it anticipates negotiating separate agreements with some holders of existing convertible notes, specifically its 2 percent notes due in 2029 and 3 percent notes due in 2031. In these agreements, holders could exchange portions of their older debt for Nebius Class A shares.

      The company noted that it would negotiate terms with each holder and mentioned that investors participating in these exchanges might sell the shares or adjust related trades, potentially impacting the share price. They clarified that the bond sale is not dependent on these exchanges proceeding and there’s no guarantee that any of them would be finalized.

      This marks the second instance in 2026 where Nebius has utilized the convertible market, having raised around $4.3 billion in a larger offering earlier in the year, following a supply agreement with Meta. The company has also secured funding against its GPUs.

      Nebius is part of a group known as neoclouds, specializing in building and operating data centers filled with graphics chips, renting computing power to AI and other companies, and providing software to manage their systems. It has established multi-billion-dollar supply contracts with Meta and Microsoft, and in May, it acquired Eigen, a US startup specializing in tuning open-source AI models, for approximately $643 million in cash and stock, as reported by Tech.eu.

      This operational model demands substantial capital, as the chips are expensive, and operators commit to long supply contracts that necessitate building capacity. Nebius has indicated that a significant portion of its recent revenue has come from advance payments by customers, aiding in funding its expansion while obligating it to deliver services. The convertible market has emerged as a prevalent method for similar companies to secure large funds while presenting investors with low cash coupons in return for the opportunity to convert to stock later.

      Trading under the ticker NBIS on Nasdaq, Nebius is led by founder Arkady Volozh and has been experiencing rapid growth. The company reported a considerable rise in revenue during the second quarter, largely due to advance payments from customers. It has also entered capacity agreements, including a $1 billion contract with the AI startup Reflection.

      This fundraising effort is part of a broader initiative to finance the data centers vital for AI. The costs of building and equipping these centers are high, prompting companies to seek debt, stock sales, and other financing methods. In Europe, firms are competing to secure computing capacity, while US regulators are evaluating the financing structures for these sites.

      Nebius has previously utilized several of these avenues, raising debt secured against its graphics chips, selling convertible bonds, and entering advance-paid capacity contracts with AI developers. This new offering adds an additional $4.5 billion to their funding efforts, on top of the approximately $4.3 billion raised