The SEC data centre letter, read from London

What the letter says

Data centre securitisation sponsors had long followed the US rules for asset-backed securities, largely because Section 3(a)(79) of the Securities Exchange Act refers to leases among the assets that can back an ABS. On 29 July 2026 SEC staff agreed that securities issued in qualifying data centre securitisations are not asset-backed securities under that section. The reasoning is that data centres are physical assets that outlast the securities and may gain value, and investors are repaid from operating cash flow rather than from financial assets that convert into cash within a set period. The letter is staff guidance, not a rule.

What changes for US deals

• Regulation AB disclosure, reporting and shelf requirements no longer apply to qualifying deals.
• Third-party due diligence providers need not furnish ABS-15G reports.
• The sponsor is not required to retain a 5% economic interest under the US risk retention rules.
• Repurchase demand reporting and the securitisation conflict of interest rule no longer apply.

What it does not cover

The relief is fact-specific. It applies where the issuer owns the data centres directly through its asset entities. Single-asset, single-borrower CMBS remains Exchange Act ABS. Commentators have flagged that lease-only revenue structures, GPU and bare-metal securitisations and structures with limited-role operators need separate analysis, and that the SEC could revisit the boundary in future rulemaking.

The view from London

For UK and European deals, the question is not the US definition but whether the transaction is a securitisation under the UK or EU securitisation rules. Those turn on whether the credit risk of an exposure or pool is tranched, and they exclude certain specialised lending exposures where the lender has substantial control over the assets and the income they generate. Data centre financings structured as property or project finance, with a single class of senior debt, are often analysed under that exclusion, while tranched notes backed by a pool of leases may fall within the rules. The SEC letter does not change this analysis, so a cross-border deal can be outside the US ABS rules and still be a securitisation in Europe, with due diligence, transparency and risk retention obligations for European investors.

Why it matters for clients

• Sponsors with US portfolios may find ABS cheaper to run than SASB CMBS on the same assets.
• European investors buying US data centre paper still need to check their own due diligence and risk retention obligations.
• GPU financings should not assume the same treatment: their collateral is shorter-lived and closer to the self-liquidating assets the ABS rules were written for.

See data centre ABS vs CMBS and the data centre ABS guide.