Analysis · Structuring · 4 min read
Why the customer contract has to sit in the borrower
In a GPU loan the customer contract is the credit. If the contract sits with the parent, the lenders are lending against someone else's asset. The 2026 deals all move it into the borrower.
- 01Nscale novated its Microsoft statement of work from the group to the Ward County borrower.
- 02CoreWeave's DDTL 4.0 borrower holds the customer MSA and the site leases, all inside the lenders' security.
- 03Direct agreements with the customer give lenders notice and a chance to cure.
Neocloud sales teams sign customer contracts at group level. Lenders lend to a ring-fenced subsidiary. Before the first draw, the contract has to move from one to the other, and the way that happens matters.
Three ways to move a contract
- Novation. The parent, the subsidiary and the customer agree that the subsidiary takes over the contract, rights and obligations together. Nscale did this with its Microsoft partner statement of work at Ward County. Novation needs the customer's consent, but it leaves the borrower as the customer's direct counterparty.
- Signing in the borrower from the start. CoreWeave's DDTL 4.0 borrower is the counterparty to the master services agreement with its investment-grade customer, and the lenders take first-ranking security over it.
- Security assignment. Whichever entity holds the contract assigns its rights by way of security to the lenders. Under English law this transfers the benefit, not the burden: the borrower still has to perform.
CoreWeave DDTL 4.0: one customer contract inside the borrower
The direct agreement
Holding the contract is not enough on its own. If the borrower defaults under it, the customer could terminate before the lenders can act. A direct agreement between the customer and the lenders deals with that: notice of borrower defaults, a period for the lenders to cure them and the right to transfer the contract to a new operator. IREN has one with Microsoft in its Hardware 3 financing. DDTL 4.0 carries one with its customer, and Lambda's lenders have step-in rights under both customer contracts.
The same thinking extends to the site. In DDTL 4.0 the data centre leases and licences also sit in the borrower, including the Applied Digital lease at Ellendale, which was assigned in with the landlord's consent.
Questions for the next term sheet
- Does the customer contract permit novation or assignment, and on what consent terms?
- Will the customer sign a direct agreement, and how long is the cure period?
- Do termination payments go to the borrower's controlled accounts?
- Can parent-level obligations, such as service credits across a wider relationship, reach the borrower's cash?
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.
- Contract libraryGPU contracts, leases, power, equity and JVs, quoted from filed contracts.
- Financing clause libraryCash traps, coverage ratios, cures and step-in, from the filed deals.
- Issues list builderBuild an issues list from the lender’s or the borrower’s side.
- The legal desk for in-house counselEverything for counsel in one place.
Sources
- CoreWeave DDTL 4.0: pulse2.com
- Nscale SEC filing, September 2026: sec.gov
- IREN Hardware 3: SEC filing: sec.gov
- Lambda Compute I: lambda.ai
