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The guidance carves out a regulatory shortcut for data center operators raising debt, potentially unlocking a wave of new issuance to fund AI infrastructure.
The SEC just handed data center operators a regulatory gift. On July 29, the agency’s Division of Corporation Finance issued interpretive guidance clarifying that certain data center securitizations don’t qualify as “asset-backed securities” under Section 3(a)(79) of the Securities Exchange Act of 1934. Translation: a whole category of data center debt just got easier and cheaper to issue.
Data center ABS and commercial mortgage-backed securities issuance blew past $25 billion in 2025, eclipsing the combined total of the prior three years. With AI infrastructure spending showing no signs of slowing down, Wall Street needed a cleaner pipeline for this kind of capital. Now it has one.
What the guidance actually changes #
The SEC’s clarification applies specifically to securitizations where the issuing entity directly owns the data center and the securities get repaid from net operating income. Think of it like a building owner borrowing against their rental income, rather than a bank bundling up loans and selling them off.
Operators have been doing these deals since at least 2018. Companies like Sabey, Compass, CyrusOne, and STACK Infrastructure have all tapped securitization markets. But the regulatory ambiguity created friction, costs, and compliance headaches that made every deal more complicated than it needed to be.
The new guidance effectively removes those burdens for qualifying structures. Issuers won’t need to navigate the full thicket of Exchange Act ABS regulations, which means lower legal costs, faster execution, and a broader pool of potential buyers.
Why the floodgates could open #
The request for this guidance came from Latham & Watkins on July 23. The SEC turned it around in less than a week.
The SEC’s guidance resolves the classification problem for direct-ownership structures. Historically, many of these deals used master trusts or other arrangements that made compliance under traditional ABS registration standards awkward at best. The new interpretive letter draws a clear line: if you own the building and the securities are backed by its operating income, you’re not in ABS territory.
One thing worth noting: the guidance made no mention of digital assets or crypto-related infrastructure. The SEC’s focus here is squarely on traditional financial instruments and conventional data center operations. The beneficiaries are the operators building facilities for enterprise cloud computing and AI workloads, not crypto mining operations or blockchain infrastructure providers.
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