Finance / exact definitions
AI infrastructure finance glossary
111 terms for reading data centre and GPU financing. Each definition explains the financing use and the question to check in the actual documents.
A
- Acceptance
- The customer's confirmation, after testing, that delivered GPU capacity meets the contract specification. Acceptance usually starts the billing period, and GPU loans often make it a condition to drawing.
- Add-on notes
- Further notes issued under an existing indenture, on the same terms, usually to fund expansion. Indentures limit them with tests such as maximum loan-to-cost.
- Advance rate
- The percentage of a specified eligible value that may support borrowing.
- All-in financing cost
- A cash-flow-based measure of financing expense that specifies the proceeds, interest, fees, discount and repayment assumptions included.
- Amortisation
- The scheduled reduction of debt principal over time.
- Anticipated repayment date (ARD)
- The date on which a securitisation expects principal repayment, often before final legal maturity.
- Asset-backed securities (ABS)
- Notes issued by a bankruptcy-remote vehicle and repaid from the cash flow of a pool of assets rather than from the sponsor's general credit. In digital infrastructure, ABS is backed by data centre leases or, increasingly, GPU capacity contracts.
- Assignment
- A transfer of specified contractual rights, subject to the agreement and applicable law.
- Availability period
- The window during which a borrower can draw a committed facility. In GPU DDTLs it is set to match the expected delivery schedule of the GPUs.
B
- Backstop
- A commitment by a stronger third party to cover a weaker party's payment obligations if it defaults or becomes insolvent, without being a full guarantee of the debt.
- Back-up manager (back-up servicer)
- A third party appointed at closing to take over managing the assets if the sponsor-manager fails or is removed. A standing back-up reassures investors and rating agencies that the cash flow can continue without the sponsor.
- Bad-acts guarantee
- A limited parent guarantee that covers losses from specific misconduct, such as fraud, wilful misconduct or wrongful diversion of cash, but not ordinary non-payment.
- Balloon payment
- A principal amount left to repay at the end of a loan after any earlier amortisation.
- Benchmark floor
- A minimum benchmark value used in the financing's interest calculation.
- Borrowing base
- The amount of lending capacity supported by eligible assets or cash flows after applying advance rates, limits and deductions.
- Build-to-suit
- A data centre built to one customer's specification, usually with a long lease signed before construction starts. Financed with a construction loan and later refinanced with a lease-backed bond or joint venture.
C
- Cash flow available for debt service (CFADS)
- Cash left for debt payments after the operating costs, taxes and other deductions specified by the model or financing documents.
- Cash sweep
- A requirement to apply a defined portion of excess cash to debt repayment or a specified account.
- Cash trap
- A contractual mechanism that retains cash otherwise available for distribution when a specified test or event occurs.
- Collateral accounts
- Bank accounts held by the borrower but controlled by the lenders' agent, through which all project cash must flow. Each account has rules on when money can move.
- Colocation
- A data centre model in which an operator provides space, power, cooling and connectivity to customers who install their own servers. Ranges from retail (a few racks) to wholesale (whole halls).
- Colocation agreement
- The contract under which a data centre operator houses a customer's servers and provides power and cooling. In GPU financings it is a key project contract, and lenders usually want a direct agreement with the colocation provider.
- Commercial mortgage-backed securities (CMBS)
- Bonds backed by mortgage loans on commercial property. Data centre CMBS is often single-asset, single-borrower (SASB) and floating rate, an alternative to master trust ABS.
- Commissioning
- The testing and verification process establishing that installed systems perform to specified requirements.
- Commitment fee
- A charge on the undrawn or otherwise defined available portion of a committed facility.
- Completion support
- An undertaking intended to fund or address defined project-completion risks before agreed release conditions are met.
- Concentration limit
- A ceiling on exposure to a specified customer, location, asset type or other category within a financing pool.
- Conditions precedent (CPs)
- Requirements that must be met or waived before a contractual obligation, often a loan draw, becomes effective.
- Consent and agreement
- The usual US name for a direct agreement: a counterparty's consent to the lender's security over a contract, with notice, cure and step-in rights.
- Contract realisation ratio
- A transaction-defined measure comparing realised or eligible contract performance with a specified contractual reference amount.
- Convertible note
- Debt that may or must convert into equity or another security under specified terms.
- Credit enhancement
- Anything that improves the credit of a financing beyond the borrower's own: guarantees, backstops, residual value guarantees, reserves or subordination.
- Credit margin
- The contractual spread added to a floating benchmark to determine interest, subject to the loan's other rate provisions.
D
- Debt service coverage ratio (DSCR)
- Cash available for debt service divided by the debt service specified for the same period.
- Debt service reserve account (DSRA)
- A reserve intended to cover a defined amount of debt service, held as cash or an accepted support instrument.
- Delayed draw term loan (DDTL)
- A committed term facility drawn in stages during an agreed availability period, subject to conditions for each borrowing.
- Direct agreement
- An agreement giving a financier defined rights with a key project counterparty, often including notices, cure periods or step-in arrangements.
- Distribution reserve
- An account that holds cash due to the owner for a period before release, giving lenders a buffer if a test is failed in the meantime.
- Draw conditions
- The conditions that must be met before each draw of a delayed draw facility, such as delivery or acceptance of GPUs, an executed customer contract, a signed direct agreement and a passing sizing test.
E
- Eligibility criteria
- The conditions an asset, contract or receivable must satisfy to support a financing.
- Energisation
- The point at which electrical equipment or a connection is made live under the relevant operating process.
- Equity cure
- The sponsor's right to remedy a failed financial test by injecting equity. Facilities limit how often it can be used and what it counts towards.
- Equity pledge (share pledge)
- Security over the shares in the borrower, letting lenders take control of the whole company on enforcement instead of seizing assets one by one.
- Excess cash flow (ECF)
- Cash left after operating costs, debt service and required reserves. It is what sweeps and traps act on.
- Ex-miner
- A former bitcoin mining company that has repurposed its power, land and sites for AI and high-performance computing, often leasing capacity to neoclouds or hyperscalers.
- Export credit agency and development finance institution (ECA / DFI)
- Institutions with distinct mandates: an ECA supports eligible exports, while a DFI finances eligible development objectives through its permitted products.
F
- Fixed coupon
- A stated interest rate applied to the contractual principal basis of fixed-rate debt.
- Form ABS-15G
- An SEC form on which issuers or underwriters of asset-backed securities publish third-party due diligence reports, typically an accountants' agreed-upon procedures report on the asset data tape. For 144A data centre deals it is often the only public document.
G
- GPU depreciated amount
- A scheduled reduction in the value of financed GPUs used in a loan-to-cost test, so the maximum debt falls as the hardware ages.
- Grid connection agreement
- An agreement defining rights, works, costs and conditions for connecting a site to a network.
- Guarantee
- A contractual undertaking by one party to answer for specified obligations or losses of another, on defined terms.
- Guaranteed minimum value (GMV)
- The amount a residual value guarantor promises an asset will realise at a given date, with the guarantor paying any shortfall.
H
- Haircut
- A reduction applied to an asset value or cash-flow amount for a defined financing calculation.
- Hedge counterparty
- The party owing or receiving payments under a derivative contract.
- Hyperscaler
- One of the largest cloud and internet companies operating data centres at massive scale, such as Amazon, Microsoft, Google, Meta and Oracle. They are both the largest data centre tenants and the largest customers of neoclouds.
I
- Intercreditor agreement
- An agreement allocating rights among creditor groups, including payment priority, enforcement control and standstill arrangements.
- Interest during construction (IDC)
- Interest accruing while a project is being developed, whether paid currently, capitalised or funded from a reserve.
- Interest rate swap
- A derivative exchanging specified interest-payment streams on a notional amount, commonly fixed against floating.
- Investment-grade sizing DSCR
- A debt-sizing coverage assumption applied to cash flows attributed to an investment-grade counterparty under a particular methodology.
L
- Legal final maturity
- The contractual last date for repayment, distinct from an earlier expected repayment date where a structure has both.
- Letter of credit (LC)
- A bank undertaking to pay a beneficiary against a complying presentation under its terms.
- Limited recourse
- An arrangement restricting a creditor's claims to specified entities, assets or undertakings, subject to the documents and applicable law.
- Liquidity reserve
- A reserve in a securitisation available to pay interest and senior costs if collections fall short.
- Loan to cost (LTC)
- Debt divided by the contractually defined eligible project cost.
- Loan to value (LTV)
- Debt divided by an asset or business value measured on a stated basis and date.
- Lock-up
- The English project finance term for a test that blocks distributions to shareholders while it is failed. Functionally similar to a cash trap.
- Longstop date
- A contractual deadline after which specified consequences may arise if a milestone has not occurred.
M
- Maintenance capital expenditure
- Spending needed to maintain an asset's or operation's service capability, defined on the basis used in the analysis.
- Make-whole
- A prepayment premium that compensates lenders for interest they lose if a loan or bond is repaid early, often stepping down over time.
- Master services agreement (MSA)
- The framework contract between a neocloud and its customer, under which capacity orders or statements of work are placed. In GPU loans it is the core collateral.
- Master trust
- A securitisation structure that lets an issuer issue multiple series of notes over time, under one master indenture, against a shared and growing pool of assets.
N
- Neocloud
- A cloud provider built to rent GPU computing capacity for AI, such as CoreWeave, Nebius, Nscale, Lambda, Crusoe and Fluidstack.
- Net recovery
- Cash expected or realised from a recovery route after the costs and priority claims included in the calculation.
O
- Offtaker
- The contractual purchaser of a project's output or reserved service, such as compute capacity or data-centre space.
- Original issue discount (OID)
- The difference when debt is issued for proceeds below its stated principal amount, on the issue-price basis specified.
P
- Parent guarantee
- A guarantee from the operating group of its financing subsidiary's debt. Its scope (full, limited or bad acts only) is one of the main credit differences between GPU loans.
- Payment-in-kind (PIK) interest
- Interest that is added to principal instead of being paid in cash. In ABS, junior classes may switch to PIK when a trigger is hit.
- Payment waterfall
- The contractual order in which available money is allocated among costs, reserves, interest, principal and distributions.
- Post-ARD step-up
- The extra interest that accrues on securitisation notes not refinanced by the anticipated repayment date.
- Powered land
- A site marketed with some degree of access to electrical capacity; the term has no single financing-grade definition.
- Powered shell
- A data centre building with power and connectivity delivered but without internal fit-out, which the tenant installs. The landlord's risk is close to real estate.
- Project bond
- A bond issued by a ring-fenced project company and repaid from project revenues, here usually data centre leases.
- Projected contracted cash flows
- The cash a borrower expects to receive under its customer contracts, as modelled at signing. GPU loans are sized on it and test actual receipts against it.
R
- Rapid amortisation
- A contractual mode in which available cash is redirected toward accelerated principal repayment following a trigger.
- Rated final maturity
- The legal final date by which securitisation notes must be repaid, often decades after the ARD. The rating addresses repayment by this date.
- Recognition agreement
- An agreement under which a third party, such as a backstop provider, recognises a lease and agrees what happens on the tenant's default.
- Remarketing
- Finding a new customer for financed capacity after the original contract ends or fails. Lenders treat a credible remarketing right as part of residual value protection.
- Residual value
- An estimate of what an asset will be worth at a specified future date on a stated valuation basis.
- Residual value guarantee (RVG)
- An undertaking to meet a specified asset-value shortfall under defined conditions at a specified date or disposal event.
- Retail colocation
- Colocation sold in small amounts (racks or cages) to many customers on shorter contracts, with the operator managing the facility.
- Rule 144A
- A US securities rule that lets issuers sell bonds to large institutional buyers (qualified institutional buyers) without full SEC registration. Most data centre ABS and lease-backed project bonds are sold this way, which is why their offering documents are generally not public.
S
- Secured Overnight Financing Rate (SOFR)
- A US dollar overnight benchmark measuring the cost of borrowing cash secured by US Treasury securities.
- Security perfection
- The steps needed under the applicable legal system to make a security interest effective against relevant third parties or achieve a specified priority.
- Series supplement
- The document that sets the terms of one series of notes under a master indenture: size, coupon, rating, ARD and rated final date.
- Service level agreement (SLA)
- Contract terms setting required uptime and performance, with credits or penalties for breaches. In GPU contracts SLA credits directly reduce the cash available to lenders.
- Single-asset, single-borrower (SASB)
- A CMBS deal backed by one loan to one borrower, often on a large data centre portfolio.
- Sizing DSCR
- The minimum ratio of projected contracted cash flow to debt service used to set how much can be borrowed against a contract.
- Special purpose vehicle (SPV)
- An entity established for a defined project, asset pool or transaction.
- Stabilised
- A data centre that is built, leased and operating at its expected level, so its cash flow can support long-term financing such as ABS.
- Step-in rights
- Contractual rights allowing a beneficiary or its nominee to intervene in a project or contract when specified conditions occur.
- Structural subordination
- The position of a creditor whose claim sits at a holding company above operating entities with their own obligations.
T
- Take-or-pay
- A contractual payment obligation tied to reserved capacity or a minimum purchase, subject to the agreement's qualifications.
- Tenor gap
- A mismatch between the remaining debt horizon and the duration of the supporting contract, site right or asset usefulness.
- Termination payment
- A payment due when a contract ends under the circumstances and calculation stated in that contract.
- Triple-net (NNN) lease
- A lease under which the tenant pays rent plus property taxes, insurance and maintenance, leaving the landlord with a cleaner rental income stream.
- True sale
- A transfer of assets to a securitisation vehicle that is legally effective so the assets are outside the seller's estate if it becomes insolvent.
U
- Utilisation
- The proportion of defined available capacity that is used, sold or billed over a specified period.
V
- Variable funding note (VFN)
- A note that allows drawings and repayments within contractual limits rather than one fully funded issuance.
- Vendor finance
- Financing provided by an equipment supplier or its finance arm to help a customer buy its products.
W
- Warrant
- A right to buy shares at a set price. Backstop providers sometimes receive warrants in return for their support.
- Wholesale colocation
- Colocation sold in large blocks, such as whole halls or floors, to fewer tenants on longer contracts.
Definitions explain common financing use. Transaction definitions, governing law and the actual document take precedence; no term here establishes a market-standard covenant or right.
