Nebius prices upsized $5B convertible debt offering to fund AI cloud expansion

Amsterdam-based Nebius Group announced on Thursday that its $5 billion convertible bond represented one of the largest corporate convertible debt sales ever recorded, indicating strong demand for AI services and data center capacity. Despite recent sector uncertainties, the firm raised the bond size from $4.5 billion late on Wednesday, with the potential to grow to $5.75 billion if all options are utilized.

Nebius, which sells AI services to tech firms and data center capacity to customers like Meta and Microsoft, raised the total convertible debt to around $12 billion. Funds from the new offering, led by Goldman Sachs and JPMorgan, will be utilized to fund the company's data center expansion and further develop its AI services. The convertible debt consists of $3 billion in notes due 2030 at a 0.5% interest rate and $2 billion in 2034 notes at 4.5%.

The bonds can be converted at stock prices ranging from $313 to $325, providing a premium of over 40% to the current $220.10 price. Following the announcement, Nebius' stock price fell nearly 10%, but it has more than doubled this year. The company reported a second quarter net loss of $190 million on sales that increased fivefold to $582 million, exceeding estimates.

Nebius continues to invest heavily in data center capacity, with $5.7 billion in capital spending in the quarter. "We know that everything we build, we can sell several times over," said Nebius' chief communications officer Tom Blackwell.