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.
How it works
Hyperscalers are the handful of companies that build and run cloud and internet infrastructure at the largest scale: Amazon Web Services, Microsoft Azure, Google Cloud, Meta and Oracle, with others such as Alibaba and Tencent in Asia. They buy capacity in three ways: by building and owning campuses, by leasing data centres from developers, and by contracting GPU capacity from neoclouds.
In GPU and data centre deals
A hyperscaler's signature is often the most important credit in an AI infrastructure financing. A long lease or capacity contract with an investment-grade hyperscaler lets a developer or neocloud borrow far more, at lower margins, than its own balance sheet would support. Lenders look closely at whether the hyperscaler's obligation is a firm commitment, how and when it can terminate, which entity signs, and whether a parent guarantee sits behind that entity.
What gets negotiated
- Which group company signs the lease or contract, and whether the parent guarantees it
- Termination rights, including for late delivery or service failures
- Assignment and consent: whether the contract can be charged to lenders without a fresh consent
- Direct agreement or recognition agreement terms giving lenders step-in rights
How it works in a deal
In data centre finance the tenant's credit often matters more than the developer's. A lease to a hyperscaler with an investment-grade rating can support long-dated, fixed-rate debt that the developer could not raise on its own balance sheet.
Example. Hut 8's Beacon Point notes priced at 6.129% to 2042, non-recourse to Hut 8, on the strength of a triple-net lease to an unnamed high investment-grade tenant. Hut 8: Beacon Point notes →
For in-house counsel
Hyperscaler in the filed documents
Where the term turns up in filed contracts and what is market, for the lender’s or the borrower’s side. Previews are open; the full text is free with InfraCompute Weekly.
- What’s market: Hyperscaler lease backstop (recognition agreement)What does a hyperscaler backstop of a neocloud lease actually commit to?
- Contract library: Hyperscaler recognition agreementsWhat does the hyperscaler backstop actually commit to?
- Contract library: Where the termination fee goes, and what the hyperscaler gets for itIf the hyperscaler lets the lease go, how does its money reach the landlord’s debt?
- The legal desk for in-house counselContract library, issues lists, checklists and English law notes.
Related terms
Explanatory definition, not a statement that a particular transaction contains this term or a substitute for its contractual definition.
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