Rising Fed Rates Pressure GPU Financing for AI Buildout

The Fed's rate hike and expectations of another are raising borrowing costs for companies financing AI data centers and GPUs. Large deals from CoreWeave, Iren and Nscale use floating-rate DDTLs, but many include hedges covering 75–110% of projected floating-rate borrowing.

• SOFR rose to 3.87% as of Sept. 23 from a May low of about 3.5%
• Spreads on recent big GPU loans range from 2.25 to 5.5 percentage points over SOFR
• CoreWeave hedges at least 95% of floating-rate borrowing under its $8.5 billion facility
• Nscale requires hedges covering 90–110% on its $1.85 billion and $1.2 billion loans