Cipher Compute debt ratings affirmed as Fitch maintains BB- on Texas data center project

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Cipher Compute debt rating affirmed

Highlights

Fitch affirmed Cipher Compute LLC's BB- Long-Term Issuer Default Rating and $1.733 billion senior secured notes with a Stable Outlook, citing ongoing construction risk at the Texas data center projected to be fully operational in 1Q27.
Estimated project costs increased due to tenant design changes, resulting in a 10-year lease extension with a leading AI lab and parent equity advances to cover overruns, with Google providing lease guarantees in case of tenant default.
Revenue is fully contracted under a 10-year lease covering 207MW critical IT load, with Fitch forecasting an average debt service coverage ratio of 1.34x from 2027-2036 but rating remains constrained by incomplete construction and limited operating track record.

Project completion profile and rating drivers

As reported by Fitch Ratings, the agency affirmed Cipher Compute LLC's Long-Term Issuer Default Rating at BB- and its $1.733 billion senior secured notes at BB-, with a Recovery Rating of RR3 and a Stable Outlook. Fitch says the rating is anchored by remaining completion risk at the 300 gross MW, 207 IT MW Barber Lake data center, where one data hall has started rent and the rest of the facility is due to be fully operational in 1Q27.

Fitch assesses completion risk as weaker, saying the project has progressed materially with all permits in place, equipment largely secured and a prefunded six-month debt service reserve account. Tenant design changes and change orders have increased estimated costs and led to a lease amendment that captures the higher cost base and adds a 10-year extension with a leading AI lab.

According to Fitch, parent company Cipher Digital has advanced equity to cover part of the change-order spending and is expected to be reimbursed through additional rent, while any further overruns beyond available liquidity would need sponsor support. The agency says the outside completion date gives a six-month cushion beyond the target schedule, although a breach could allow lease termination without compensation.

Revenue support and sector implications

Fitch views supply and revenue risks as stronger because the site already has 300MW of approved interconnection, is energized and does not require additional transmission infrastructure to secure power. The project is also entering operation with agreements needed for participation in the ERCOT market, while the existing substation is being upgraded to N+1 redundancy.

Revenue is fully contracted under a 10-year modified gross plus electricity lease covering the project's 207MW critical IT load. Although Fluidstack is unrated, Fitch says Google's recognition and financial support arrangements require Google to assume the lease if a replacement tenant is not found within 90 days after a default, or to pay termination fees covering all debt, including expansion notes.

Fitch says the operating phase financial profile is strong, with an average debt service coverage ratio of 1.34x over 2027 to 2036 and a project life coverage ratio of 1.48x at the 2030 maturity under its rating case. Still, the agency says the rating remains constrained by unfinished construction, Cipher Digital's relatively limited high-performance computing operating track record and the borrower's ability to raise additional debt for expansion or another project.

Earlier, we reported on LandBridge rating affirmation as Fitch cited strong cash flow and a Stable Outlook.

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