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Banks would not commit to Volta's chip-backed piece. Anduril is letting its staff sell shares. Strive pays about 16.7% for new money. Bitcoin funds stood still. |
THE NUMBER
95 cents.
That is the price at which Volta's $5 billion AI loan sold this week, reports said. Banks had first offered it at 97 to 98 cents. The yield ended above the 11% banks had floated. The loan found buyers, at a discount.
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IN FOCUS
Volta's AI Loan Needed a Discount to Sell. Direct Lenders Raised More and Lent Less.
On Wednesday, PMD called final terms on Volta's loan the next price. To sell it, the banks added buyer protections and a prepayment penalty, one person familiar said. The loan is unrated, and Volta is a first-time borrower. Big loan funds objected, reports said.
The banks underwrote only a $1.3 billion piece, reports said. It funds lease payments for a data center in Norway. The other $3.7 billion buys about 36,000 Nvidia chips, which back it. The banks offered that piece without committing to it. Chips can lose value as newer ones arrive. Anthropic has a six-year deal to buy computing power at the site, people familiar said. This week, it told investors its sales hit $16.8 billion last quarter, reports said.
Direct lenders have the reverse problem. Their funds raised 35% more this year through September, Preqin data show. Their lending last quarter was about 28% below a year earlier, PitchBook LCD estimates show. In the quarter, about $16.4 billion of their loans moved to bank-led deals. Only $2.6 billion moved the other way.
Last night, PMD said that if the split held, credit would keep flowing to steady firms. AI builders would keep paying more to borrow. Volta's terms fit the second half.
Other Borrowers Have Choices. AI Builders Pay Up.
Lenders are not short of money. But buyers balked at Volta's loan, and the banks would not commit to its chip-backed piece. If lenders keep treating chip collateral that way, the next AI cloud loan would likely cost as much. The first test is where Volta's loan trades once it starts trading.
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SIGNALS IN MOTION
SIGNAL 1: Varonis's Deal Spread May Pay Less Than a One-Year Treasury. Anduril Capped Its Staff Sale at $1.3 Billion.
Proofpoint, owned by Thoma Bravo, agreed to buy Varonis for $49.75 a share in cash. The firms expect to close in the first half of next year. Before the open, Varonis (VRNS) was quoted near $48.60. If the deal closes in late June, that gap earns less per year than the one-year Treasury's 4.49%. Thoma Bravo has committed the equity, and lenders the debt.
Anduril is letting staff sell shares at a price that values it at about $90 billion, reports said. Anduril has confirmed the tender. Sales are capped at about $1.3 billion. These are existing shares, not new money, and the buyers have not been named.
What resolves this
Varonis's proxy should show how many bidders took part. If the spread's yearly return tops Treasury yields, traders would be pricing real risk.
SIGNAL 2: Warsh Declined to Commit. Kalshi's October Hike Bet Halved by Dawn.
Last night, PMD said any shift in Warsh's tone would show first in Kalshi's October hike contract. He gave no signal. "I don't prejudge meetings," he said in Bangkok. The contract fell anyway. At 11:46 p.m., it traded at 27 cents. By 4:42 a.m., it was at 14. Asian markets were trading too, and trades carry no stated reason.
Bond buyers had moved first. The 10-year yield closed Thursday at 5.10%, down 9 basis points. The Cleveland Fed's Beth Hammack warned of an "inflationary mindset." If one takes hold, she said, the Fed "might need to move even more." The Fed's quiet period starts Saturday.
What resolves this
Import prices are the next data point. If they move the contract no more than producer prices did, traders have left October to the chair.
SIGNAL 3: Strive Paid About 16.7% for Bitcoin Money. Bitcoin Funds Stood Still.
On Wednesday, PMD said Strive's final size and price would show what its money costs. Strive (ASST)sold more preferred stock than planned, raising about $630 million before fees. Buyers paid $90 for each $100 of stated value. With a 15% dividend, the yield at issue is about 16.7%. Bitcoin heads its list of possible uses.
Last night, PMD said Thursday's fund flows would show if bitcoin buyers came back. The flows suggest they stopped selling but did not buy. U.S. spot bitcoin funds took in a net $5.1 million. Ether funds lost $60.3 million, a second day of outflows. Early Friday, bitcoin was near $82,000.
What resolves this
Where Strive's preferred trades against $90 will show whether demand for it is running out. MSCI's Nov. 11 list will name the firms that fail its new index test.
THE CROSSOVER
Private Market Trends Driving Public Market Moves
Money is easy to find for deals that look safe. Deals tied to chips or coins pay more for it.
Varonis, with its buyer's money committed, trades close to its deal price. Volta's loan, unrated and mostly backed by chips, needed a discount. The banks would not commit to the chip piece. Strive pays about 16.7% for money that may buy bitcoin. If chips or coins lose value, that gap would likely widen. Builders that need new debt would then lean on equity, or slow down.
On the calendar...
When |
Event |
Fri., Oct. 16 |
Import prices, 8:30 a.m.; industrial production, 9:15 a.m.; Travelers reports |
Sat., Oct. 17 |
Fed quiet period begins |
Tue., Oct. 20 |
Netflix, GM and RTX report; Strive's preferred settles; LIV Golf court hearing |
Wed., Oct. 21 |
Tesla reports |
Sun., Oct. 25 |
Brazil's presidential runoff |
Oct. 27-28 |
Fed meeting |
Mon., Nov. 9 |
Anduril tender closes; Strive's first preferred dividend |
Wed., Nov. 11 |
MSCI names firms that fail its index test |
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