Summary
The data-centre boom has produced a kind of project we had not seen before: a gas supply, a power plant and a compute hall that only make sense together, in a market where none of the three has been financed on its own. The sponsor turns up with a local bank’s term sheet for the first phase, a land lease, a gas allocation and a queue of would-be tenants, and no structure that lets institutional capital fund the whole thing.
Our answer is the structure that has financed capacity-backed power for thirty years, with two offtakes instead of one. A ring-fenced project company that borrows without recourse to its sponsors, repays from contracted revenue collected in an account the trustee controls, and gives lenders a security package that survives the failure of any single counterparty. This paper walks through it, the parties, the flow of funds, the tariff, the security, the construction-phase cover, and the two decisions a sponsor has to make before any of it works.
1 · Why it has to be non-recourse
In a non-recourse financing the lender looks to the project’s own cash flows and assets for repayment, not to the sponsor’s balance sheet. The sponsor’s exposure stops at its equity; the lender’s protection is the set of contracts. For a gas-power-compute project of a few hundred million dollars in an emerging market this is the only structure that works, and there are three reasons.
Nobody in these markets has a balance sheet that can guarantee the debt, and a local bank’s fifty-million first-phase term sheet, welcome as it is, will not fund the other three hundred and often carries terms that put off the investors who could.
Institutional capital, and a rating, attach to contracted receivables held in a ring-fenced vehicle. They do not attach to a developer’s promise.
And the three pieces carry different risks. Gas supply is a commodity contract. Power is a utility-style asset. Compute is a technology-market asset. Isolating each is what makes the combination fundable.
2 · Who does what
| Role | Who | What they do |
|---|---|---|
| Borrower | Project company (host-country vehicle, owned by the sponsor group with a local partner where required) | Owns or holds under concession the plant, the data hall, the land and the grid works; sells under the PPA and the compute contracts; borrows |
| Issuer | Bond vehicle (neutral jurisdiction) | Issues the MIGCorp Bond; on-lends to the project company under a loan agreement and promissory note |
| Trustee / security agent | At the bond vehicle | Holds every security instrument for bondholders; controls the collection account; releases construction money against certified milestones |
| Power offtaker | Utility, industrial user, or the data hall itself | Pays a two-part tariff under a long PPA; provides payment security |
| Compute offtakers | Hyperscaler, GPU-cloud operator, enterprise tenants | Pay under colocation or capacity contracts with minimum commitments |
| Fuel supplier | Gas producer or LNG supplier | Supplies under a long-term agreement whose volume and price formulas match the PPA energy charge |
| Contractors | EPC for power, EPC for data, O&M | Build and run under fixed-price, date-certain contracts with liquidated damages |
| Arranger | MIG | Structures, arranges guarantee and insurance, seeks the rating, places the bond, and where asked leads the delivery consortium so that EPC, project management and finance sit under one roof |
3 · Where the money goes
During construction the bond proceeds sit in escrow at the bond vehicle and go out in tranches: one for land, grid and civil or port works, one for the power plant, one for the data hall fit-out. Each release is certified by an independent engineer against a milestone schedule and paid straight to the contractor. Nothing is drawn for work that has not been certified.
In operation every dollar of revenue, PPA payments, compute capacity payments, surplus power sales, is paid into a collection and reserve account the trustee controls. It funds, in order, operating costs and fuel; debt service; a debt-service reserve of six to twelve months; maintenance reserves; and only then distributions to the sponsor. The sponsor cannot reach revenue ahead of the bondholders. That waterfall, more than any guarantee, is what a rating agency is looking at.
4 · Making the revenue bankable
The PPA has to be two-part. A capacity charge, payable on availability whether or not power is dispatched, sized to cover debt service, reserves and fixed costs, indexed to the bond currency: that is the bankable leg. And an energy charge per kilowatt-hour covering fuel and variable cost, passed through to the gas supply formula. A single blended price negotiated in the abstract leaves the lender holding dispatch risk and the sponsor holding fuel risk. Two parts make the price a sum of auditable pieces plus a return.
The compute contracts have to look like a PPA. Colocation and GPU-capacity agreements are bankable when they carry minimum committed capacity, a term that covers a good part of the debt tenor, take-or-pay or availability-based payment, rated counterparties or payment security, and assignment rights in favour of the lenders. Spot GPU rental is upside. It is not security.
Where the data hall is itself the power offtaker, the integrated case, the lender looks through to the compute contracts as the real source of repayment and sizes the debt to committed compute revenue plus whatever firm surplus-power PPA exists with the grid.
For a sense of scale, and nothing more: a USD 350 million project funded 80% by a twenty-year amortising bond carries debt service somewhere in the mid-twenties of millions a year, depending on the coupon. Against 100 megawatts of IT capacity sold at even conservative committed rates, that is comfortable coverage. It is why these projects attract capital once the contracts exist, and why they do not before.
5 · What the trustee holds
For the life of the bond the trustee holds, first, payment security from the offtakers: a standby letter of credit or bank guarantee from the power offtaker’s bank covering two to three years of capacity payments, and deposits or parent guarantees from the compute tenants. Second, an assignment of every project contract, PPA, compute agreements, gas supply, EPC, O&M, with direct agreements that give the trustee notice, cure and step-in rights if the project company defaults. Third, pledges over the project company’s shares, its accounts and, where the law allows, the physical assets; where the host state must own infrastructure, an assignment of concession rights with termination compensation sized to the outstanding debt. Fourth, the construction-phase security in the next section, until commercial operation. And fifth, the insurances, construction all-risks, delay in start-up, operating all-risks and business interruption, political-risk cover where the rating requires it, with the trustee as loss payee.
6 · Covering the construction window
Until the plant runs, bondholders have paid for an asset that cannot yet pay them back. The structure covers that window the way export finance covers a ship on the slipway.
| Risk | Instrument | Typical sizing |
|---|---|---|
| Contractor fails to deliver | Advance-payment or refund guarantee from the contractor’s bank | 100% of advances until certified, stepping down as title vests |
| Commercial operation is late | Delay liquidated damages under the EPC, behind a performance bond | Bond of 10–15% of EPC price, covering about a year of financing cost |
| Delivered but under-performing | Performance damages or capacity buy-down | Present value of the revenue shortfall per MW below contract |
| Short delays | Capitalised interest and the debt-service reserve | Construction period plus a six-to-twelve-month tail |
| Availability after start-up | O&M availability regime with damages | Below an agreed floor |
7 · Two decisions before anything else
Phase it, or fund it all at once? A fifty-million first phase that earns before the next raise keeps carried-but-idle capital to a minimum and avoids paying for money not yet needed. A single raise for the whole site gives more leverage with contractors, protects against rising rates and, which matters most, produces one rated instrument instead of a pile of bilateral loans with conflicting terms. We run both through the model and let one question decide: can the first phase sell its power and compute fast enough to carry the second? If so, phase. If the compute contracts are already signed for the whole site, raise once.
Who holds the offtake? The contracts have to sit in the project company that borrows, in a jurisdiction and under a governing law the rating agency and the investors will accept, with receivables collected in the trustee’s account. Offtake held by an affiliate, by a parent somewhere else, or by a counterparty exposed to sanctions or currency controls cannot be lent against, however good the economics look.
8 · What the sponsor has to bring
Before we start structuring the sponsor delivers land, owned or under long lease; the generation and data-centre licences; environmental approval; a signed gas supply agreement or allocation with a credible back-up; grid interconnection terms for surplus sales and standby; and letters of intent from compute offtakers. These are local responsibilities. No arranger can substitute for them, and the structure in this paper turns them into a financeable project but cannot conjure them.
9 · One partner from mandate to delivery
We structure and arrange the financing, provide or arrange collateral and guarantees where the sponsor cannot, seek the rating at the vehicle level, place the bond with institutional investors and oversee disbursement. Where the sponsor wants it, we lead the delivery consortium so that EPC, project management and finance answer to one structure. The instrument is the MIGCorp Bond: one vehicle per project, a rating sought independent of the sponsor’s balance sheet, tenors matched to the contracts, and about twenty weeks from mandate to funding once the documentation is complete.
The AI build-out will be financed the way power has always been financed, against contracts, in a box, with the lender first in line. The projects that arrive with the box already built will fund first.
MIG Corp publishes research on the structuring and financing of emerging-market infrastructure. Related papers: The MIG Enhancement Explained (8200-1318); When the power is late, who pays? (8200-1319); MIGCorp Bond one-pager (8200-1313); Financing AI Data-Centre Power (8200-1312); Floating LNG-to-Power for AI Data Centres (8200-1311). Further information on specific transactions is available under NDA from investments@mig-corp.com.
This paper is for information only and does not constitute an offer or solicitation. MIG International Ltd — RAK ICC Reg. No. A002/09/12/5254 — investments@mig-corp.com · mig-corp.com
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