SEC eases data-center securitization rules

On July 29, the SEC's Division of Corporation Finance issued interpretive guidance clarifying that certain data-center securitizations, where the issuer directly owns the data center and securities are repaid from net operating income, do not qualify as 'asset-backed securities' under Section 3(a)(79) of the Securities Exchange Act of 1934. This exempts these deals from disclosure, investor protection, and risk retention requirements that were established after the 2008 financial crisis. The guidance was issued in response to a request from law firm Latham & Watkins, which advocated for the clarification. The change reduces legal costs and compliance burdens for data center operators, potentially unlocking a wave of new debt issuance to fund AI infrastructure. Data center ABS and CMBS issuance exceeded $25 billion in 2025, and the market is on pace for a record year. The guidance does not apply to commercial mortgage-backed securities backed by data centers, and it does not address crypto-related infrastructure. The Trump administration has supported the data-center buildout through executive orders aimed at accelerating AI development.