Nebius Group NV (NBIS) is leasing computing power based on Nvidia Corp. (NVDA) chips and just borrowed US$3.5 billion From Citigroup.
The facility will expire in 364 days, according to an Oct. 22 news release. The one-year term makes it a bridge to longer-term financing, rather than the financing itself.
Timing speaks louder than dollar figures. A day earlier, Nebius revenue chief Marc Boroditsky told CNBC that the price of artificial intelligence computing is rising faster than expected. He said the October 20 capacity auction showed prices were still climbing.
He also distinguished Nebius from CoreWeave Inc. (CRWV), whose debt default insurance costs have reached distress levels, CNBC reported. “We didn’t take on debt like they did,” Boroditsky said.
Taken together, the moves show the company is confident in demand but unwilling to lock in long-term debt at current prices.
Chief Operating Officer Ophir Nave said: “Sequencing financing is how we optimize our long-term cost of capital.”
Also Read: Nebius Shares Drop Below $200 as CoreWeave Debt Panic Spreads
One-year Citi loan buys Nebius time
The loan charges Term SOFR, a benchmark that tracks U.S. short-term interest rates, plus 2.75 percentage points, the release said. The gap could rise to 3.5 percentage points. Since the base interest rate is floating, any interest rate hikes by the Federal Reserve will increase Nebius’s interest expenses.
Last week, I wrote that cheap money has become the scarcest investment for GPU landowners. As I pointed out at the time, Nebius’s first secured loan in July cost 2.5 points more than SOFR. The Citi trade started a quarter of a percentage point higher, a modest premium rather than a sign of distress.
In addition to customer upfront payments and operating cash flow, the funds will fund data centers and GPUs, the release said. Reuters reports that the company has issued about $10 billion in convertible bonds.
A bridge is only as safe as its exit. Nebius can draw on asset-backed financing tied to more than $40 billion in contracts with investment-grade clients, Nave said. Boroditsky added that if it comes online, Nebius will sell out of its 2027 production capacity, CNBC reported.
Rental rates still determine how much profit will be lost by demand. Nebius has just put these rates on public display.
Bloomberg/Getty Images
Nebius puts GPU prices where lenders can see them
Nebius began publishing live spot prices for its GPU capacity on October 21, the company said. Spot capacity is the amount of time Nebius can interrupt operations. These prices also appear on external platforms such as Silicon Data.
CNBC noted that investors are debating how quickly Nvidia chips lose economic value. Nebius has just provided an instant scoreboard for this devaluation debate.
Nvidia Vice President Nico Caprez called the hardware “efficient, durable and fungible” in Nebius’ announcement. The word “durable” is controversial.
Crusoe CEO Chase Lochmiller offered the opposite view. “We’re seeing higher A100 pricing today than we did in 2020 or 2021,” he told CNBC, referring to older Nvidia chips. Strong rents from aging chips are how Neocloud earns back its GPU spend.
Real-time price feedback is two-way. If rates fall, Citi and every shareholder will see it firsthand. I would watch this page more carefully than any executive interview.
Nebius is also piloting offering rebates to customers who release idle GPUs back into the spot pool. The pilot quietly acknowledged that there is still some reserved capacity that remains unused, although Boroditsky told CNBC that demand still exceeds supply.
Customers paying these prices are producing
Nebius’ client list points to daily workloads rather than hoarding. Dutch Prosus says Nebius’ inference service has doubled the throughput of its e-commerce business.
Neobank Bunq’s assistant Finn matches leading closed models on Nebius at 60% of the cost per answer, the company said. Cheaper answers tend to raise more questions, so falling unit costs still increase total computing spend.
The company also said its European production capacity now spans six countries from Finland to Iceland. It adds $10 million in computing grants to attract builders in the region. Both need more data centers, with Citi lending funding the next phase of global construction.
More artificial intelligence:
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The stock has not been rewarded on either move. SpaceX (SPCX) shares rose on October 21 after reporting a nine-fold increase in artificial intelligence revenue, according to CNBC. It ended almost flat and fell nearly 4% in premarket trading the next day.
Analysts are more patient. 22 analysts tracked by StockAnalysis rate Nebius a purchase $283.60 USD. The target is located approximately 65% Above the latest close, bets on signings outweighed today’s debt crunch.
Once a GPU leasing deal becomes public, lenders can price the chips behind each Neocloud loan. In this market, the cheapest borrower is likely to win the build-out race, not the fastest builder.
The price Nebius pays to refinance the bridge will tell what every competing lender is thinking now.
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