Analysis · Cross-sector lessons · 5 min read

Why data centre ABS warns earlier than GPU loans

Data centre securitisations start trapping cash at 1.30x to 1.35x. GPU project loans wait until 1.10x. That does not make GPU loans riskier. It reflects two different answers to one question: when must the debt be repaid?

Randeep Bubbra | Lawyer | Making the next generation of infrastructure financeable · Firm profile
24 October 2026 · Free to read · Views are personal

The short version

01Data centre ABS trap cash at 1.30x to 1.35x DSCR and switch to rapid amortisation at 1.20x.
02GPU project loans trap at 1.10x and default at 1.05x.
03The difference follows the repayment profile: ABS relies on refinancing, GPU loans repay in full from the contract.

Put the trigger levels from four data centre ABS deals next to those in two 2026 GPU project loans and the gap is striking. The ABS deals, from Vantage, Centersquare, STACK and Compass, trap cash when DSCR falls to 1.30x or 1.35x and start paying down principal at 1.20x. IREN's Hardware 3 and Nscale's Ward County loans trap cash at 1.10x and have a 1.05x financial covenant.

Figure 1

Data centre ABS traps cash earlier than GPU project loans

Cash trapRapid amortisation (ABS) or default covenant (GPU loans)

Show the data table

Facility	Type	Cash trap	Amortisation or default	Note
Vantage Cardiff ABS	Data centre ABS	1.35x	1.20x	Averaged over three calculation dates; principal paid if the trap lasts more than nine months
Centersquare ABS	Data centre ABS	1.35x	1.20x	Master indenture triggers
STACK ABS	Data centre ABS	1.30x	1.20x	Three-month average; trap springs to 1.45x on Class A DSCR after the springing date
Compass ABS (Class A)	Data centre ABS	1.30x	1.20x	Class B and C ladders step down to 1.15x/1.10x and 1.05x/1.00x
IREN Hardware 3	GPU project loan	1.10x	1.05x	Cash trap prepays after six months; 1.05x financial covenant
Nscale Ward County	GPU project loan	1.10x	1.05x	Cash trap prepays after six months; 1.05x financial covenant with cure

Trigger levels from offering documents and rating agency reports (ABS) and SEC-filed credit agreements (IREN, Nscale). DSCR definitions differ between the two markets. From What Aircraft and Infrastructure Finance Teach GPU Lenders.

Two ways to repay a debt

Data centre ABS is built around an anticipated repayment date, often about five years after issue. Until then, notes pay little or no scheduled principal. Investors expect to be repaid by a refinancing, backed by a building with a life of decades and leases that may or may not be renewed. The triggers are an early warning system: if cash flow weakens, cash stops leaving the structure well before interest is threatened, and the notes begin to amortise.

A GPU project loan has no refinancing assumption. It is sized to repay in full from contracted revenue before the contract ends, because the hardware's useful life is short. Every payment already includes principal. The structure does not need to switch to amortisation when things go wrong, because it is amortising already.

So a lower trigger in a GPU loan does not mean a looser deal. The protection sits in the sizing, at 1.20x to 1.30x, and in the repayment profile, rather than in early triggers.

Where the ladders meet

Look closer and the two markets share more than the headline numbers suggest:

Averaging. Vantage Cardiff tests its triggers on an average over three calculation dates, and STACK uses a three-month average, so one bad month does not trip a trigger.
From trap to prepayment. In Vantage Cardiff, principal is paid if a trap lasts more than nine months. In the IREN and Nscale loans, trapped cash prepays the loan after six months.
Class ladders. Compass sets lower levels for its junior notes, stepping down to 1.15x and 1.10x for Class B and 1.05x and 1.00x for Class C. GPU loans are mostly single-class today.
Springing triggers. STACK's trap springs to 1.45x on Class A DSCR after a set date, tightening as the deal ages.

DSCR is defined differently in the two markets, so the levels are a guide to design rather than a like-for-like comparison.

Questions for the market

As GPU loans start to outlive their contracts, should their triggers move towards ABS levels?
Would averaging and springing triggers suit GPU loans, where cash flow can move sharply with uptime?
When GPU portfolios are securitised, which ladder will investors expect?

For in-house counsel

Take it to the documents

The filed wording behind this piece, for the lender’s or the borrower’s side. Previews are open; the full text is free with InfraCompute Weekly.

Bond protectionsCovenants and holder protections in data centre and neocloud bonds, from the indentures.
Financing clause libraryCash traps, coverage ratios, cures, step-in and GPU security, quoted from credit agreements and indentures.
Issues list: Bond indentureBuild it from the lender’s or the borrower’s side, with where filed deals land.
The legal desk for in-house counselContract library, issues lists, checklists and English law notes.

Sources

IREN Hardware 3: SEC filing: sec.gov
Nscale SEC filing, September 2026: sec.gov
Data centre ABS: offering documents and rating agency new issue reports for each transaction

Data centre ABS explained GPU-backed loans explained What Aircraft and Infrastructure Finance Teach GPU Lenders

Randeep Bubbra | Lawyer | Making the next generation of infrastructure financeable. Firm profile. Built from public filings, company releases and rating agency reports. General information only, not legal or investment advice; views are personal and not those of any employer or client.

General information only, drawn from public documents and press reports, which are cited. It is not legal, financial or investment advice. Mention of a company or transaction does not mean the author or any firm acted on it, and nothing here is a view on any company's credit. Views are personal and are not those of any employer or client.