Goldman Sachs suspends bond issuance for digital center company related to the incident with the Chicago Mercantile Exchange

On Thursday, according to media reports, Goldman Sachs Group has suspended its planned $1.3 billion mortgage bond issuance for data center operator CyrusOne, following a major outage at the key facilities of the CME Group it supports, which caused disruptions at one of the world's largest derivatives exchanges.

According to insiders, Goldman Sachs was previously leading this transaction, which was set to become the largest commercial mortgage bond issuance in CyrusOne's history, with initial market feedback expected to be collected by November 25. This currently suspended transaction was originally designed as a 5-year bond. The largest tranche was a AAA-rated $606.9 million tranche, which was expected to be priced 1.9 percentage points above the Secured Overnight Financing Rate (SOFR).

However, just a few days later, the CME data center located in Aurora, Illinois, experienced a cooling system failure that led to a global market disruption lasting over 10 hours. This facility is a core hub that handles trillions of dollars in derivatives trading daily.

CyrusOne's refinancing transaction was originally scheduled to be priced this week but has now been put on hold. The transaction may be restarted in the first quarter of next year. CyrusOne is jointly owned by KKR & Co. and Global Infrastructure Partners (GIP).

This debt is secured by three data center campuses located in Aurora, approximately 35 miles from downtown Chicago. CME accounts for about 14% of the total rental income corresponding to the exchange, making it the second-largest client of the campus.

Media analysis points out that the equipment failure that occurred last week has served as a wake-up call for investors. In recent years, investors have poured hundreds of billions of dollars into the AI data center boom, and this incident serves as a reminder that data center lease agreements are not ironclad, many of which contain termination clauses that can be triggered by repeated outages.

CyrusOne's data center in the Chicago suburbs stated that it has strengthened backup cooling capabilities following the overheating that led to last Friday's "circuit breaker" incident. It is still unclear what exactly went wrong with the system, but during the incident, temperatures in the campus reportedly soared above 100 degrees Fahrenheit (about 38 degrees Celsius).

Although CME's disaster recovery plan requires switching to data centers in the New York area when necessary, the exchange did not activate backup facilities at the time, as the information it had indicated that the failure at the Aurora site would be brief. However, the incident ultimately turned into one of CME's longest unplanned outages in recent years.

Historically, exchanges have found it difficult to relocate data centers, as traders prefer to keep infrastructure nearby to ensure faster information transmission, thereby gaining a slight edge over competitors