QTS launches $3.9B bond sale to fund Microsoft-linked data center

The five-year notes were marketed at a 7.63% yield and drew about $10 billion in indications of interest.

Blackstone-backed QTS Realty Trust units launched a roughly $3.9 billion investment-grade bond sale to help finance a data center tied to Microsoft, Bloomberg reported Tuesday, citing a person familiar with the matter.

Initial price talk for the five-year notes indicated a yield of about 7.63%, a level more typical of junk bonds. The offering drew roughly $10 billion in indications of interest as marketing concluded.

The financing, known as Project Odyssey, is about $1 billion larger than the amount initially discussed with investors. Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley are managing the sale.

Proceeds will support construction, development and operation of the data center, along with general corporate expenses and distributions to QTS unit QualityTech, the person said.

Moody’s is expected to rate the notes Baa3, while Fitch is expected to assign a BBB- rating. Both are the lowest investment-grade ratings.

AI infrastructure companies have issued large amounts of debt this year, but investors have become more selective amid concern about spending levels. QTS subsidiaries sold $4.6 billion of high-grade debt in April at a 5.7% yield; those bonds yielded 7.16% on Tuesday.

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