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Applied Digital Raises $1.59 B in Senior Secured Notes to Expand North Dakota AI Data Center, Illinois Imposes 0.2% Crypto Transaction Tax, Moodys Highlights Private Credit Risks
In a headline‑making move that could reshape the AI infrastructure landscape, Applied Digital Corporation (NASDAQ: APLD) closed a $1.59 billion senior secured note offering to fund a massive expansion of its North Dakota data‑center campus.
The notes—issued through the company’s subsidiary APLD ComputeCo 3 LLC—carry a 7.000 % coupon and mature in 2031. They were sold at par to qualified institutional buyers under Rule 144A and to non‑U.S. investors under Regulation S, with Goldman Sachs & Co. LLC acting as the representative of the initial purchasers. The proceeds will be used to add 150 MW of critical IT load at ELN‑04, the fourth building at Polaris Forge 1, and to repay a $300 million bridge loan from Goldman Sachs Bank USA that had a 364‑day maturity and an interest rate of SOFR plus 275 basis points. The senior secured notes are backed by first‑priority liens on substantially all assets of the issuer and its guarantors, thereby replacing short‑term construction borrowing with five‑year secured debt.
Polaris Forge 1 is anchored by CoreWeave, Inc., which signed long‑term leases for 400 MW of critical IT capacity in August 2025. Those leases are expected to generate roughly $11 billion in total revenue over their term. The $1.59 billion raise follows a $2.15 billion senior secured notes offering that closed in March 2026 to finance the Polaris Forge 2 campus in Harwood, North Dakota.
In a separate development, Illinois Governor JB Pritzker signed Senate Bill 3019, which imposes a 0.2 % tax on the value of digital assets involved in each transaction. The Digital Asset Privilege Tax Act takes effect on January 1 2027 and applies to out‑of‑state brokers once their Illinois sales reach $100 000. The tax is triggered by the act of transacting, not by any subsequent profit, and is projected to generate more than $800 million in additional revenue for the state’s 2027 budget. The Crypto Council for Innovation described the measure as “the most punitive digital asset tax in the country” and warned that it could create a chilling effect on digital asset activity in Illinois. Chicago hosts several major crypto and trading firms, including Jump Crypto and Bitnomial, and industry groups fear the tax will push such companies toward jurisdictions with more favorable regulatory environments. Because the tax was inserted into a large budget bill rather than debated as standalone legislation, observers say the most likely path to change is through litigation.
On the private‑credit front, Moody’s Ratings global head of private credit Marc Pinto highlighted the evolving risk profile of AI infrastructure lending during a Bloomberg Open Interest interview on June 16. Pinto noted that asset‑based lending around data centers and energy is growing fast, while software‑heavy loan books face mounting uncertainty. He described the market as entering a “more complex and more volatile phase,” warning that the first major refinancing wave is expected around 2028, which will serve as a sorting mechanism for lenders. Pinto added that many loans that now appear on non‑accrual lists were originated in 2020‑22, a period he characterized as a “Goldilocks‑type market” of near‑zero rates and generous growth assumptions. He cautioned that the refinancing wave could expose the risks associated with software‑centric debt portfolios, especially given the high exposure of business development companies to software firms.
The combination of Applied Digital’s debt issuance, Illinois’s new crypto tax, and Moody’s assessment of private‑credit risks illustrates a broader trend of increasing regulatory scrutiny and market complexity in the digital‑asset and AI‑infrastructure sectors. While the notes provide a stable funding source for the company’s North Dakota expansion, the state’s tax policy and the evolving credit environment may influence future capital‑raising decisions and operational strategies for companies operating in the AI and crypto spaces. As of now, the $1.59 billion note offering has closed, the Illinois tax will take effect in 2027, and the anticipated refinancing wave in 2028 remains a key uncertainty for lenders and borrowers alike. The next few years will likely see further developments in state‑level digital‑asset taxation, private‑credit market adjustments, and continued expansion of AI‑focused data‑center infrastructure.
The notes—issued through the company’s subsidiary APLD ComputeCo 3 LLC—carry a 7.000 % coupon and mature in 2031. They were sold at par to qualified institutional buyers under Rule 144A and to non‑U.S. investors under Regulation S, with Goldman Sachs & Co. LLC acting as the representative of the initial purchasers. The proceeds will be used to add 150 MW of critical IT load at ELN‑04, the fourth building at Polaris Forge 1, and to repay a $300 million bridge loan from Goldman Sachs Bank USA that had a 364‑day maturity and an interest rate of SOFR plus 275 basis points. The senior secured notes are backed by first‑priority liens on substantially all assets of the issuer and its guarantors, thereby replacing short‑term construction borrowing with five‑year secured debt.
Polaris Forge 1 is anchored by CoreWeave, Inc., which signed long‑term leases for 400 MW of critical IT capacity in August 2025. Those leases are expected to generate roughly $11 billion in total revenue over their term. The $1.59 billion raise follows a $2.15 billion senior secured notes offering that closed in March 2026 to finance the Polaris Forge 2 campus in Harwood, North Dakota.
In a separate development, Illinois Governor JB Pritzker signed Senate Bill 3019, which imposes a 0.2 % tax on the value of digital assets involved in each transaction. The Digital Asset Privilege Tax Act takes effect on January 1 2027 and applies to out‑of‑state brokers once their Illinois sales reach $100 000. The tax is triggered by the act of transacting, not by any subsequent profit, and is projected to generate more than $800 million in additional revenue for the state’s 2027 budget. The Crypto Council for Innovation described the measure as “the most punitive digital asset tax in the country” and warned that it could create a chilling effect on digital asset activity in Illinois. Chicago hosts several major crypto and trading firms, including Jump Crypto and Bitnomial, and industry groups fear the tax will push such companies toward jurisdictions with more favorable regulatory environments. Because the tax was inserted into a large budget bill rather than debated as standalone legislation, observers say the most likely path to change is through litigation.
On the private‑credit front, Moody’s Ratings global head of private credit Marc Pinto highlighted the evolving risk profile of AI infrastructure lending during a Bloomberg Open Interest interview on June 16. Pinto noted that asset‑based lending around data centers and energy is growing fast, while software‑heavy loan books face mounting uncertainty. He described the market as entering a “more complex and more volatile phase,” warning that the first major refinancing wave is expected around 2028, which will serve as a sorting mechanism for lenders. Pinto added that many loans that now appear on non‑accrual lists were originated in 2020‑22, a period he characterized as a “Goldilocks‑type market” of near‑zero rates and generous growth assumptions. He cautioned that the refinancing wave could expose the risks associated with software‑centric debt portfolios, especially given the high exposure of business development companies to software firms.
The combination of Applied Digital’s debt issuance, Illinois’s new crypto tax, and Moody’s assessment of private‑credit risks illustrates a broader trend of increasing regulatory scrutiny and market complexity in the digital‑asset and AI‑infrastructure sectors. While the notes provide a stable funding source for the company’s North Dakota expansion, the state’s tax policy and the evolving credit environment may influence future capital‑raising decisions and operational strategies for companies operating in the AI and crypto spaces. As of now, the $1.59 billion note offering has closed, the Illinois tax will take effect in 2027, and the anticipated refinancing wave in 2028 remains a key uncertainty for lenders and borrowers alike. The next few years will likely see further developments in state‑level digital‑asset taxation, private‑credit market adjustments, and continued expansion of AI‑focused data‑center infrastructure.
