Applied Digital Corp. just convinced bond investors to hand over $2.35 billion for a data center that doesn’t exist yet, in a North Dakota town most people couldn’t find on a map. The bonds carry a 9.25% coupon and were priced at 97 cents on the dollar, putting the effective yield at approximately 10%.

That’s a hefty price tag for capital. But the pitch is simple: CoreWeave, the AI cloud computing company that has become one of the most sought-after tenants in the data center world, has signed long-term lease agreements for the facility. Those contracts could generate between $5 billion and $11 billion in revenue over their roughly 15-year duration.

What the deal actually looks like

The senior secured notes, issued through a private offering in November 2025, mature in 2030. Proceeds are earmarked for construction of AI and high-performance computing facilities at what’s called the Polaris Forge 1 campus in Ellendale, North Dakota.

CoreWeave’s contracted capacity at the site has already expanded from an initial 250 MW to 400 MW.

Applied Digital, which trades on the Nasdaq under the ticker APLD, is positioning itself as a landlord for the AI boom. The company builds and operates data centers purpose-built for high-performance computing, then leases that capacity to cloud providers and AI companies under long-term agreements.

CoreWeave is the anchor tenant here, and that’s both the selling point and the risk. Having a single customer responsible for the lion’s share of revenue from a $2.35 billion bond offering creates what bond analysts politely call “concentration risk.”

Why investors bought in anyway

A 10% yield on secured debt is genuinely attractive in the current market. The bonds are rated in junk territory, meaning credit agencies don’t consider Applied Digital’s debt investment-grade.

If CoreWeave’s leases generate the projected $5 billion to $11 billion in revenue over 15 years, Applied Digital would have more than enough cash flow to cover the debt payments on notes that mature in just five years. The 3% discount to par at issuance sweetened the deal further for initial buyers.

Senior secured notes sit at the top of the capital stack, meaning bondholders have first claim on the physical assets if things go sideways.

Applied Digital is a relatively small company taking on a massive construction project. Building a 400 MW data center campus on time and on budget is no trivial exercise.

The bigger picture for AI infrastructure debt

CoreWeave itself has been on a financing tear. The company, which started as a crypto mining operation before pivoting to GPU cloud computing, has raised billions in debt and equity to fund its expansion. Its willingness to sign 15-year leases with operators like Applied Digital reflects the long time horizons that AI infrastructure investments demand.

The concentration risk embedded in this specific deal is the variable that matters most. Applied Digital is essentially making a leveraged bet that CoreWeave will remain solvent and growing for the next 15 years.