Ropes & Gray Attorneys Attend DealCatalyst’s Digital Infrastructure Finance 2.0 Conference

Ropes infrastructure and ABS finance lawyers Chris Poggi, Martha Kammoun and John Schneider attended Digital Infrastructure Finance 2.0: The Role of Private and Public Capital, held in New York City on June 17.  Industry leaders from the private equity, banking, investor, legal and rating agency sectors convened to discuss the current state of the rapidly expanding financing market for digital infra assets such as fiber broadband networks, data centers and GPU chipset assets, and challenges facing issuers and asset allocators in these sectors.

1. Finance and capital availability are not the bottleneck for data center deployment. Power capacity was identified by conference panelists as the chief limiter of data center buildouts, followed by local and federal regulatory pushback and delays. “Behind-the-meter” solutions where the data center developer builds out a dedicated power supply for the project face the reality of steep expense profiles that will pressure project economics. Panelists expected that rapid improvements in battery and other storage solutions would make them an increasingly more cost-efficient alternative while the industry waits for grid operators to modernize their systems to the point of reliability where behind the meter investments become less necessary. Another constraint to the development of new data center locations or the retrofitting of existing shells is the literal weight of the next generation of cooling systems necessary to dissipate the heat generated by increasingly power-dense GPU chipsets. Panelists noted that, at roughly 3x the weight or more of systems from the last generation, the combination of the new chipsets and their cooling infrastructure can be too heavy for the concrete foundations of existing data center designs to support. Conference panelists viewed the combination of these challenges as contributing to a slowdown in buildouts and the related financings in early 2026.
2. Obsolescence risk continues to be a focal point for data center and GPU financing. Conference panelists discussed concerns that the longevity and durability of data center assets have not been proven out, with the possibility the useful life of both chipsets and their powered shells may be less than currently modeled and that therefore assets may be overvalued. However, some conference panelists disagreed with that assessment and believe that data center shells with settled power supply solutions will prove to be adaptable to future needs and retain high valuations, especially considering the bottlenecks discussed above and a possible increase in bottlenecks to new projects such as public resistance to data centers and AI in general. Likewise, some panelists noted their view that, contrary to the prevailing market sentiment, the assumed six-year useful life used to support residual-value insurance for GPU chipsets is too short as historical experience has shown them to have a durable demand curve, driven in part by the flexibility of the uses to which GPUs can be put. On one hand, unexpectedly fast technological leaps in chip capacity or power efficiency could make existing chipsets less competitive more quickly. On the other hand, panelists observed that any disruption to the flow of chips from Taiwan could, in their view, extend out the valuation curve of existing chips materially. These issues directly impact available financing terms for these assets: contracted data center cashflows, supported by long-term hyperscaler leases, are increasingly financed with longer-term securitization offerings, whereas GPU chipset financings typically carry much shorter terms—often two to six years—with front-loaded amortization toward zero or a bullet repayment designed to address the steep GPU depreciation curve.
3. Fiber broadband ABS continues to shine as an asset class. Fiber ABS has continued its strong growth as a financing option for broadband operators through Q1 and Q2 2026, with investor interest extremely strong and several repeat issuers coming back to market successfully. Conference panelists described fiber ABS as a good way for investors to obtain exposure to digital infra ABS while avoiding the current valuation noise around data center assets. Panelists noted that fiber network investments, particularly dark fiber solutions, will continue to be key to the buildout of data center assets, and expect a number of new fiber ABS offerings to come to market in the second half of 2026.

Ropes & Gray's Infrastructure Finance and ABS lawyers advise on novel structuring issues in some of the most complex infrastructure debt offerings, including broadband and cell tower ABS, 4(a)(2) and 144A securities offerings, and warehouse financings backed by infrastructure assets. Consistently ranked among the world's leading finance and securitization teams with recognition from Chambers USA, The Legal 500, U.S. News, and IFLR1000, the firm brings deep experience across hard-asset securitizations and other financings backed by physical infra collateral and recurring future revenues.