Payment waterfall
The contractual order in which available money is allocated among costs, reserves, interest, principal and distributions.
How it works
The payment waterfall sets the order in which available cash is used: typically operating costs, then senior fees and interest, then principal, then reserves, then junior debt, and finally distributions to the owners. Each level is paid in full before the next receives anything.
In GPU and data centre deals
In GPU loans and data centre ABS, the waterfall controls where the customer's payments go once they reach the controlled account. Triggers such as a cash trap or rapid amortisation change the waterfall, diverting cash from distributions to repaying debt. Reading the waterfall shows who is protected, and in what order, when things go wrong.
What gets negotiated
- The order of payments before and after a trigger
- Where operating costs and manager fees sit
- Reserve top-ups
- Conditions for any distribution to the owners
Why the distinction matters
Read the normal, trigger and enforcement versions. Priority of payment from an account is not necessarily the same as priority in collateral proceeds.
Read the structure
A practical reading of securitised data-centre cash flows, triggers and expected repayment.
Data centre ABS: follow the pool and the waterfall ↗For in-house counsel
Take it to the documents
The filed wording behind GPU and data centre financings, for either side of the table. Previews are open; the full text is free with InfraCompute Weekly.
- Financing clause libraryCash traps, coverage ratios, cures and step-in, from the filed deals.
- Contract libraryGPU contracts, leases, power, equity and JVs, quoted from filed contracts.
- Issues list builderBuild an issues list from the lender’s or the borrower’s side.
- 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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