The Collateral Is Not Enough: Why AI Data-Center Debt Is Becoming Milestone-Backed Finance

A secured loan sounds reassuring.

There is a borrower.

There is debt.

There is collateral.

If the borrower fails, the lender has security.

That model becomes more complicated when the lender is financing something that is still becoming an asset.

A data-center developer may already control the land.

A customer may already have signed a long-term lease.

Construction may already have started.

But the site may still lack a final permit, an energised grid connection, commissioned equipment or tenant-accepted capacity.

The collateral exists in some form.

The revenue-producing asset does not yet fully exist.

That distinction is becoming financially important.

On 8 September 2026, Reuters Breakingviews reported that AI-related debt issuance had reached nearly $500 billion through early August 2026, according to Goldman Sachs, representing about one-fifth of higher-rated U.S. debt issuance for the year.

At the same time, lenders were becoming more cautious about delivery risk.

Supply chains.

Permits.

Power connections.

Community opposition.

Construction schedules.

Tenant readiness.

Reuters highlighted CyrusOne as an example: part of its financing intended for new construction could not be drawn until required permits had been obtained and leases signed.

Reuters Breakingviews: AI construction crunch widens credit fault lines

Reuters had already reported in August that lenders were paying closer attention to permitting and community risk in U.S. data-center financing.

Reuters: Lenders scrutinize US data center financing as community opposition builds

The infrastructure lesson is simple:

The lender is not financing only collateral. The lender is financing a sequence of verified states.

Project readiness is a financial state

A data-center project can move through states such as:

Site identified
    ->
Site controlled
    ->
Permitted
    ->
Power secured
    ->
Tenant contracted
    ->
Construction started
    ->
Building substantially complete
    ->
Power energised
    ->
Data halls commissioned
    ->
Capacity delivered
    ->
Tenant accepted
    ->
Rent commenced

These states are not interchangeable.

A lender may attach different financing consequences to each one.

“Committed” and “drawable” are different

A committed facility does not necessarily mean that all money is immediately available.

A simplified construction facility may work like:

Facility committed
    ->
Draw request
    ->
Conditions checked
    ->
Evidence reviewed
    ->
Draw approved
    ->
Funds disbursed

If one required condition is missing:

Facility still exists

but:

Current draw availability = No

A project-finance record therefore needs to distinguish:

• total commitment;
• amount drawn;
• undrawn commitment;
• current drawable amount;
• conditions for the next draw; and
• evidence supporting those conditions.

A permit is not just a PDF

A permit can exist as a document while still being:

• conditional;
• expired;
• appealed;
• suspended;
• limited to one phase;
• superseded; or
• irrelevant to another building.

The lender’s question is not:

Do we have a permit file?

It is:

Does the project currently have the permit required for this financing step?

A useful permit record could include:

Permit type
Authority
Project / phase
Issue date
Conditions
Expiry
Challenge / appeal
Current validity
Source
As-of date

A signed lease is also a state

A lease may be:

• signed but conditional;
• dependent on minimum capacity delivery;
• subject to tenant termination rights;
• commencing only after acceptance;
• limited to one phase;
• supported by a guarantee; or
• not yet rent-bearing.

Therefore:

Lease signed

does not automatically mean:

Revenue has started

The contract has its own lifecycle.

Galaxy Helios shows the milestone-to-revenue transition

Galaxy Digital’s Helios campus provides a clear example.

Galaxy reported that Phase I delivered approximately 200 MW of gross power and 133 MW of critical IT load to CoreWeave under a 15-year lease.

The company described that delivery as the point at which Helios moved from a construction project into revenue-generating operations, with rent commencement scaling with capacity delivered during Q2 2026.

Galaxy: Helios Phase I delivers 133 MW of critical IT load to CoreWeave

Galaxy: Second Quarter 2026 Financial Results

The useful lifecycle is:

Lease
    ->
Construction
    ->
Power delivered
    ->
Critical IT capacity delivered
    ->
Tenant acceptance / availability
    ->
Rent commencement

The customer contract existed before the asset produced rent.

The project state changed when actual capacity became deliverable.

Capacity needs precise identity

A data center can contain several capacity measures:

• requested grid capacity;
• approved grid capacity;
• contracted utility capacity;
• gross site power;
• energised capacity;
• critical IT load;
• capacity under construction;
• commissioned capacity;
• tenant-delivered capacity; and
• revenue-generating capacity.

A field called:

Capacity: 200 MW

can therefore be misleading.

The financial meaning depends on the state.

“Power secured” can mean several things

A project can have:

Interconnection application

without:

Approved connection

It can have:

Approved connection

without:

Energised capacity

And it can have:

Energised capacity

without:

Tenant-ready data halls

AI infrastructure makes electricity a first-class project-finance object.

Project dependencies form a graph

A simplified project looks linear:

Land -> Permit -> Power -> Construction -> Tenant -> Rent

Real projects are not.

A permit may depend on environmental review.

A power connection may depend on transmission work.

A lease may require minimum delivered capacity.

Commissioning may depend on transformers and cooling systems.

Rent may depend on tenant acceptance.

That means project readiness is a dependency graph, not one status field.

One draw can depend on several states at once

A draw may require:

Permit valid
AND
Lease effective
AND
Equity funded
AND
No default
AND
Budget compliant
AND
Milestone certified

A platform should preserve each input separately.

The conclusion:

Draw eligible

is only as strong as the underlying evidence.

Galaxy’s secured notes show that collateral does not eliminate completion risk

In July 2026, Galaxy priced $3.507 billion of 9.875% senior secured notes due 2031 through Galaxy Helios Data Centers II LLC.

The proceeds were intended to finance construction of Helios Phase II.

Galaxy said the notes and related guarantee would be secured by first-priority liens on substantially all assets of the issuer and guarantor, subject to exclusions, plus the equity interests of the issuer held by its parent.

Galaxy: Pricing of $3.507 Billion of Senior Secured Notes

The financing is clearly secured.

Yet Reuters Breakingviews noted that the debt still priced at a relatively high yield.

That exposes a basic distinction:

Collateral answers part of the recovery question. Milestones answer the completion question.

A strong lien does not build the data center.

Security state and development state are different

A lender needs both.

Security state

What assets secure the debt?
Who granted the security?
What priority exists?
What has been registered?

Development state

What has been built?
What remains?
Which approvals exist?
Which dependencies are unresolved?
When does revenue begin?

Both affect the financing.

They should not be collapsed.

Cost-to-complete is a live field

Construction credit faces a simple risk:

Remaining funding
<
Cost required to finish

A lender may therefore need:

• original budget;
• current approved budget;
• incurred costs;
• paid costs;
• committed construction costs;
• contingency;
• change orders;
• undrawn debt;
• remaining equity;
• current cost to complete; and
• latest review date.

The original budget is historical evidence.

The current cost-to-complete state determines today’s risk.

Construction milestones need provenance

Suppose a draw requires:

Foundation complete

A robust record should show:

Milestone: Foundation complete
Status: Confirmed
Building: A
Source: Engineer certificate
Certificate date: ...
Reviewer: ...
Effective date: ...

That is stronger than:

Construction progress: 25%

without source or scope.

Percent complete can mean different things

A project described as 70% complete might mean:

• 70% of budget spent;
• 70% of physical work complete;
• 70% of schedule elapsed;
• 70% of equipment delivered;
• 70% of capacity commissioned; or
• 70% of tenant capacity accepted.

Those are different measurements.

The system should always identify the measurement object.

Equipment supply can become a financing dependency

AI data centers require long-lead equipment such as:

• transformers;
• switchgear;
• generators;
• cooling systems;
• fibre;
• racks;
• control systems; and
• computing hardware.

A project can be structurally advanced while still unable to operate because one critical system is missing.

The equipment lifecycle may therefore matter:

Ordered
    ->
Manufactured
    ->
Shipped
    ->
Delivered
    ->
Installed
    ->
Tested
    ->
Accepted

Tenant credit and tenant readiness are different

A hyperscaler can be a strong counterparty.

That addresses one layer of risk.

It does not answer:

Can the project deliver the contracted capacity on time?

The lender should distinguish:

Tenant credit

from:

Lease status

from:

Capacity delivery

from:

Rent commencement

One event can change several financial states

Consider:

Data hall accepted by tenant

That event may:

1. satisfy a construction milestone;
2. trigger rent commencement;
3. create a receivable;
4. change project valuation;
5. alter lender covenant calculations;
6. release contractor retention; and
7. move one phase into operating status.

The event becomes financially important because of the relationships attached to it.

Revenue commencement deserves its own state

The lifecycle should not stop at:

Construction complete

A more complete chain is:

Construction complete
    ->
Commissioned
    ->
Tenant accepted
    ->
Rent commenced
    ->
Invoice issued
    ->
Cash received

Each step has different evidence.

Project finance becomes receivables finance

Once the facility is operating, the credit story changes.

Before completion:

Construction risk

After completion:

Operating cash-flow risk

The tenant lease begins generating contractual receivables.

Those receivables may later support:

• refinancing;
• securitisation;
• asset-backed lending;
• private credit; or
• another financing structure.

The project-to-receivable lifecycle should remain connected.

A project-finance Asset Passport should preserve the full chain

For DaDepo, the useful opportunity is not to build construction-management software.

It is to create an evidence-backed financial asset record.

Financing

• borrower;
• sponsor;
• lender;
• facility;
• committed amount;
• amount drawn;
• undrawn commitment;
• current drawable amount;
• interest terms;
• maturity;
• guarantees;
• security; and
• governing documents.

Project identity

• project;
• site;
• parcel;
• project company;
• phase;
• building;
• intended use;
• target capacity;
• contractor;
• tenant; and
• current state.

Land and site control

• owner;
• leasehold or ownership interest;
• acquisition or option;
• easements;
• access;
• zoning;
• title evidence;
• expiry; and
• current status.

Permits

• permit;
• authority;
• phase;
• application;
• issue date;
• conditions;
• expiry;
• challenge;
• validity;
• source; and
• review date.

Power

• utility;
• grid region;
• requested capacity;
• approved capacity;
• contracted capacity;
• interconnection agreement;
• infrastructure works;
• energisation target;
• energised capacity;
• power contract; and
• current state.

Tenant / offtake

• customer;
• lease;
• contracted capacity;
• term;
• conditions;
• delivery milestones;
• acceptance criteria;
• rent commencement;
• guarantee;
• termination rights;
• amendments; and
• status.

Construction

• contractor;
• start date;
• target completion;
• current forecast;
• milestone;
• engineer certificate;
• progress;
• change order;
• delay;
• cure plan; and
• last inspection.

Budget

• original budget;
• current budget;
• incurred costs;
• committed costs;
• contingency;
• change orders;
• cost to complete;
• remaining debt;
• remaining equity;
• funding gap;
• variance; and
• as-of date.

Drawdown

• draw request;
• amount;
• permitted use;
• conditions precedent;
• evidence package;
• outstanding condition;
• approval;
• deferment;
• funding date;
• funded amount; and
• reconciliation.

Security

• collateral;
• grantor;
• secured party;
• security document;
• lien;
• priority;
• registration;
• pledged equity;
• valuation;
• release condition; and
• current encumbrance.

Commissioning and delivery

• building;
• data hall;
• gross power;
• critical IT load;
• energisation;
• commissioning;
• customer acceptance;
• delivered capacity;
• delivery date;
• defects;
• cure; and
• source.

Revenue

• contractual trigger;
• rent commencement;
• capacity subject to rent;
• invoice;
• receivable;
• due date;
• first payment;
• payment state; and
• source.

Provenance

• loan agreement;
• permit authority;
• utility;
• tenant contract;
• engineer certificate;
• contractor report;
• invoice;
• payment record;
• registry;
• lender review;
• AI-extracted field;
• professional review;
• effective date;
• version; and
• last updated timestamp.

This is project-finance evidence infrastructure.

AI can reconstruct the file—but should not approve the draw

AI can help extract and reconcile:

• project entities;
• facility amounts;
• draw conditions;
• permit numbers;
• power capacity;
• lease terms;
• contracted capacity;
• milestone dates;
• budget figures;
• engineer certificates;
• equipment delivery dates;
• commissioned capacity;
• rent commencement; and
• security references.

Across a project, AI can flag:

• an expired permit;
• a lease covering less capacity than assumed;
• conflicting delivery dates;
• a draw missing a required certificate;
• a budget change not reflected in cost-to-complete;
• power delivery later than tenant delivery;
• a milestone without supporting evidence;
• rent commencement before acceptance; or
• a project described as operational while a financed phase remains under construction.

AI should not independently determine:

• that a permit is legally sufficient;
• that a milestone has been achieved;
• that an engineer certificate is adequate;
• that a draw condition is satisfied;
• that a lender must fund;
• that a lease is enforceable;
• that cost-to-complete is correct;
• that security is perfected;
• that collateral has a particular value; or
• that a project should receive more financing.

Those remain lender, legal, engineering and valuation decisions.

What DaDepo can contribute

DaDepo does not need to become a construction lender.

It does not need to run project controls.

It does not need to certify engineering milestones.

The useful role is the information layer between project evidence and financial review.

DaDepo can help connect:

Project
    ->
Permit
    ->
Power
    ->
Tenant contract
    ->
Construction milestone
    ->
Draw eligibility
    ->
Delivered capacity
    ->
Rent commencement
    ->
Receivable

and:

Facility
    ->
Security
    ->
Draw
    ->
Current exposure

That can help an authorised reviewer understand:

• what project and phase are financed;
• which permits are current;
• what power capacity exists;
• which tenant obligations exist;
• which construction milestones are evidenced;
• which conditions remain open;
• how much debt is committed and drawable;
• what collateral secures the debt;
• what capacity has been delivered;
• whether rent has commenced; and
• which source supports each state.

The platform does not approve the project.

It makes the project-finance record inspectable.

What DaDepo does—and does not do

Creating or reviewing a project-finance Asset Passport does not mean that DaDepo has:

• originated or committed financing;
• approved a drawdown;
• determined that a condition precedent is satisfied;
• verified construction completion;
• acted as independent engineer;
• certified project progress;
• issued or validated a permit;
• confirmed zoning compliance;
• secured grid capacity;
• negotiated a tenant lease;
• determined tenant creditworthiness;
• approved a construction budget;
• calculated official cost to complete;
• provided project management;
• valued the project or collateral;
• perfected security;
• determined lien priority;
• confirmed covenant compliance;
• determined default;
• recommended financing; or
• guaranteed project completion or revenue commencement.

Important: DaDepo provides technology and information tools. It does not provide lending, project-finance underwriting, engineering certification, construction management, quantity surveying, legal, regulatory, credit, investment or valuation advice or services unless a specific service is expressly identified and lawfully provided. Drawdown conditions, completion, permit validity, interconnection rights, lease enforceability, security and financing decisions depend on the governing documents, authoritative external evidence and qualified professional review.

A practical project-readiness checklist

Before a project is treated as ready for another construction draw, ask:

1. Project: Which exact site, phase or building is being financed?
2. Borrower: Which entity owns or develops it?
3. Facility: Which financing agreement funds it?
4. Commitment: How much debt is committed?
5. Availability: How much can be drawn now?
6. Equity: Has required sponsor equity been contributed?
7. Site control: Does the borrower control the required land?
8. Permits: Which permits are required for this phase?
9. Validity: Are they currently effective?
10. Power: What capacity is requested, approved, contracted and energised?
11. Interconnection: What remains before operational grid access?
12. Tenant: Which customer is contracted?
13. Lease: Is the lease effective for this phase?
14. Capacity: How much capacity is contracted?
15. Delivery: What date must it be delivered?
16. Construction: Which milestone has actually been reached?
17. Evidence: Who certified that milestone?
18. Budget: What is the current approved budget?
19. Cost to complete: What remains to finish the project?
20. Funding: Do remaining debt, equity and contingency cover that amount?
21. Equipment: Are critical long-lead items on schedule?
22. Insurance: Is required cover current?
23. Security: What collateral currently supports the facility?
24. Draw conditions: Which conditions apply to this exact draw?
25. Exceptions: Which conditions remain outstanding, waived or reserved?
26. Commissioning: What capacity is energised and tested?
27. Acceptance: Has the tenant accepted the relevant capacity?
28. Revenue: Has rent or service revenue commenced?
29. Delay: Which milestones are behind plan?
30. Provenance: Can every material state be traced to an authoritative source?

If the answer to “what exactly has become true since the last draw?” cannot be supported with current evidence, the project-readiness record is incomplete.

The broader lesson extends beyond data centers

The same pattern appears in:

• renewable energy;
• logistics;
• hotels;
• telecom infrastructure;
• factories;
• residential development;
• hospitals;
• transport;
• mining; and
• other construction-backed private credit.

In each case, the lender finances a progression.

The collateral at closing is only one layer.

Milestones turn documents into financial events

A permit matters because it can change what the borrower may do next.

An engineer certificate may unlock debt.

A tenant acceptance certificate may trigger rent.

The document becomes valuable because it changes asset state.

That suggests a broader private-asset principle:

The most valuable document is often the one that changes the asset’s state.

Collateral remains important—but it is not enough

Galaxy’s Helios financing is explicitly senior secured.

The point is not that lenders no longer care about collateral.

It is that project credit requires more.

The lender also needs to know:

Can the project be built?
Can it be powered?
Can it be delivered?
Will the customer accept it?
When does cash flow begin?

A first-priority lien cannot answer those questions.

Before the drawdown, the evidence has to exist

The facility can be signed.

The collateral can be pledged.

The sponsor can be credible.

The tenant can be famous.

But the next dollar of construction debt may still depend on:

Permit obtained

or:

Lease effective

or:

Power available

or:

Milestone certified

or:

Capacity accepted

That leads to the broader DaDepo rule:

For development credit, project readiness should be treated as a source-backed asset state—not as a folder of supporting documents.

Collateral tells the lender what it may have if things go wrong.

Milestones tell the lender whether the financed asset is actually becoming what it was supposed to become.

Institutional private credit needs both.

Further reading

• Reuters Breakingviews: AI construction crunch widens credit fault lines
• Reuters: Lenders scrutinize US data center financing as community opposition builds
• Galaxy: Second Quarter 2026 Financial Results
• Galaxy: Helios Phase I delivers 133 MW of critical IT load to CoreWeave
• Galaxy: Pricing of $3.507 Billion of Senior Secured Notes