SEC Staff Guidance Clarifies The Exchange Act ABS Analysis For Data Center Securitizations

Key Takeaways

• Whether securities issued in data center securitizations are “asset-backed securities” under the Exchange Act has been an open question since the market began to develop.
• The SEC staff has provided guidance on that question for data center securitization structures where the issuer owns or has rights to operating data center facilities and related assets. The analysis turns on deal structure: what the issuer owns, what supports repayment and whether investors are exposed to operating data center assets rather than solely a pool of self-liquidating financial assets.
• For transactions consistent with the facts addressed, the staff guidance may support an analysis that certain securitization-specific requirements—including Regulation RR, Rule 192, Rule 15Ga-1 and Rule 15Ga-2—are not applicable.