Moody's Ratings affirmed Nvidia's Aa1 senior unsecured rating and Prime-1 short-term commercial paper rating on Tuesday, keeping a positive outlook. The move follows Nvidia's pledge to backstop billions in lease and power obligations tied to a large new AI data center campus in Ohio.
Moody's Ratings affirmed NVIDIA Corporation's Aa1 senior unsecured rating and Prime-1 short-term commercial paper program rating on Tuesday, maintaining a positive outlook. The affirmation follows Nvidia's announcement that it will provide residual value guaranties to support development of a large AI data center campus in Pike County, Ohio.
Nvidia struck agreements with SB Energy Corp. to support the Portsmouth Site AI data center campus. Under the deal, Nvidia will backstop lease and power payment obligations of an OpenAI Group PBC affiliate tied to roughly 4.25 gigawatts of IT power at the site, with the option to extend credit support for an additional 3.8 gigawatts of capacity.
Guaranty obligations capped at $105 billion
Nvidia's aggregate payment obligation under the residual value guaranties is capped at $105 billion for its initial commitment. The obligations begin once the data centers are certified ready for service, starting in 2028, and Moody's expects the guarantees to peak in 2031. The campus will run on Nvidia's DSX AI factory platform, including its GPUs, CPUs and networking equipment.
The backstop agreements follow Nvidia's August 10 announcement with six financial partners of financing platforms meant to mobilize more than $500 billion of third-party capital for long-term AI infrastructure buildout. Nvidia has the option to provide credit support for up to 25% of the aggregate financing raised through those platforms.
Debt-to-EBITDA at 0.2x
Pro forma for its $25 billion debt issuance in June, Nvidia held $106 billion of cash and marketable securities, with Moody's-adjusted total debt to EBITDA of 0.2x. Moody's expects Nvidia's revenue to grow 77% in fiscal year 2027 and 54% in fiscal year 2028, with $424 billion of cumulative free cash flow over the two-year period. Those projections underpin the positive outlook on Nvidia's credit rating even as its off-balance-sheet commitments grow alongside the AI buildout.
Source: Investing.com
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