S&P Global says data center ABS ratings remain steady as UK securitization reforms target market growth

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S&P: data center ABS, UK reforms

Highlights

S&P Global states global data center ABS ratings remain stable as demand rises from AI adoption and cloud migration, enhancing sector expansion.
451 Research forecasts global data center construction to reach $280 billion in 2026 and approximately $330 billion in 2027, reflecting sustained capital inflows.
UK Financial Conduct Authority and Prudential Regulation Authority will launch a joint consultation on Feb. 17, 2026, proposing securitization reforms likely to reshape market depth and compliance.

Data center financing outlook and ratings

S&P Global reports that ratings on global data center asset-backed securities are holding steady as the sector continues to expand on rising data usage, cloud migration, and AI adoption. The ratings agency says AI is materially increasing demand for data center infrastructure and power, especially for the initial training of large language models and the expected wider use of AI inference.

The industry backdrop remains supportive for structured finance tied to data center assets. According to 451 Research, global data center construction is set to reach about $280 billion in 2026 and could rise to roughly $330 billion in 2027, underscoring the scale of capital flowing into the sector.

UK rule changes and market implications

In a separate structured finance update, proposed revisions to UK securitization rules point to a potentially deeper domestic market. On Feb. 17, 2026, the Financial Conduct Authority and the Prudential Regulation Authority launch a joint consultation setting out reforms to their securitization framework.

The regulators have continued to engage with the industry over weaknesses seen in rules inherited from the EU after Brexit, while making occasional smaller adjustments. The new consultation goes further by proposing more fundamental changes, mainly to conduct rules, as EU authorities also finalize a broader redesign of securitization conduct standards and prudential treatment.

For issuers and investors, the parallel reviews in the UK and EU suggest a period of regulatory change that could affect market depth, compliance requirements, and the competitive position of European securitization markets.

Our earlier coverage of Reach Financial’s Reach ABS Trust 2026-2 deal examined the company’s return to the ABS market with a $405.6 million unsecured consumer loan securitization split across five note classes. We outlined how the transaction’s credit enhancement was structured, including overcollateralization, subordination (with an exception for the Class E notes), a cash reserve funded at closing, and excess spread.

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