Applied Digital $2.15B 5NC2 priced at 98.00 to yield 7.232%

Applied Digital $2.15B 5NC2 priced at 98.00 to yield 7.232%

Applied Digital’s $2.15 Billion Junk Bond Offering Priced at 98.00 to Yield 7.232%

Applied Digital Corp. has priced its $2.15 billion junk bond offering at 98.00, equivalent to a yield of 7.232%, according to a person familiar with the matter. The five-year notes will fund construction of a 200-megawatt data center in North Dakota, which the company has leased to an investment-grade hyperscaler under a 15-year agreement expected to generate $5 billion in contracted revenue.

The offering adds to a growing trend of high-yield debt financing for AI infrastructure projects. Recent deals by firms such as Tract Capital, Cipher Mining Inc., and TeraWulf Inc. have drawn strong investor demand, particularly for assets backed by major technology companies. However, Applied Digital’s November 2025 bond sale—financing facilities reliant on junk-rated CoreWeave Inc.—highlighted market caution. Those $2.35 billion notes priced at 97.00 (yielding approximately 7.5%) and traded at 104.88 cents on Monday, reflecting shifting risk perceptions.

The latest transaction occurs amid heightened geopolitical tensions following recent U.S.-Israel attacks on Iran and concerns about a potential Middle East conflict. These factors may test investor appetite for speculative-grade debt. Applied Digital’s current offering, however, suggests continued confidence in AI-driven infrastructure, given the company’s long-term lease with an investment-grade tenant.

Analysts note that yields on such bonds remain elevated compared to historical averages, reflecting both the risk profile of the sector and broader market conditions. The pricing of 98.00 for Applied Digital’s notes indicates a slight improvement in investor sentiment relative to its prior issuance, though risks from macroeconomic volatility persist.

This deal underscores the evolving dynamics of the high-yield bond market, where demand for AI infrastructure financing continues to grow despite lingering uncertainties.