Equinix announces SGD long 7-year green bonds at an IPG of 3.15%

Equinix, Inc. (Equinix) is a global digital infrastructure company focusing on data centre solutions and interconnection services. It has over 10,000 customers and serves more than 300 Fortune-500 companies, making it one of the leaders in this space.

Equinix Asia Financing Corporation Pte. Ltd. (Equinix’s financing vehicle) plans to issue new SGD long 7-year green bonds at an initial price guidance (IPG) of 3.15% for accredited and institutional investors only. The bonds will be guaranteed by its parent, Equinix, and are expected to be rated BBB+ by Fitch. Equinix itself is also rated BBB+ (Stable) by S&P, Baa2 (Positive) by Moody’s, and BBB+ (Stable) by Fitch. These issuer ratings represent improvements since its maiden SGD issuance in March 2025, when Moody’s revised the outlook to Positive and S&P upgraded its rating from BBB to BBB+.

To be specific, the bonds mature in 7.1 years and include a standard par call option two months before maturity (6.9 years). This also means the first coupon will be slightly longer than the typical half-year, falling on 15 March 2026, following which it will revert to a regular semi-annual schedule. Proceeds will be used to finance or refinance eligible green projects under Equinix’s Green Finance Framework.

Financial highlights

(Data are as of 1H25 [30 June 2025] in USD terms; growth rates are YoY unless otherwise stated.)

In 1H25, Equinix sustained its growth momentum from the ongoing tech boom (driven by trends in AI and cloud), with revenues climbing +5% to $4.5b. All three reported segments – Americas, EMEA, and Asia-Pacific – posted broad-based revenue growth of +3.5% to +5.2%. As before, recurring revenues remained a dominant component at 94.4%, edging up from 1H24’s 94.1%, with the bulk of recurring revenues coming from Enterprise (37%) and Cloud & IT (35%).

Costs were little-changed in 1H25, reflecting continued progress in ongoing cost-management initiatives. Cost of sales was roughly level at $2.2b (1H24: $2.2b) while total costs inched up +1% to $3.5b. Consequently, operating income rose by $152m (+19%) to $1.0b (1H24: $0.8b), driven by the aforementioned revenue gains. Net income after tax increased by a similar $178m (+33%) to $0.7b.

Management has once again raised its FY25 revenue guidance and is now targeting $9.2b to $9.3b. This adjustment to guidance was primarily FX-driven, accounting for $53m out of the $58m adjustment from 1Q25. Its FY25 EBITDA margin guidance was left unchanged at 49%, though 2H25 margins are expected to come in slightly higher at 50%.

Management also appears to have retained their optimism on the outlook. Equinix’s CEO cited strong pricing in 2Q25, and also highlighted that 40% of its 3Q25 bookings were closed in July, suggesting robust bookings momentum. The company is also pressing ahead with longer-term investments including its Build Bolder strategy targeting to double its xScale capacity by 2029. We think its recent 1H25 performance and guidance continue to paint a positive earnings outlook for Equinix.

Credit highlights

Equinix maintains solid credit metrics for a REIT, with net leverage reported at 3.5x (FY24: 3.4x), and we do not expect this to materially increase over the coming years (e.g. toward the 5x level). Additionally, most of its assets are unencumbered (99%), providing additional flexibility to seek financing or refinancing in future if required.

Equinix’s liquidity position remains strong, with $3.7b in cash and equivalents, alongside $0.9b in short-term investments, and another $3.9b available from its revolving credit facilities, totalling $8.5b. We also consider that its debt maturities are well spread out across 2025 to 2035, with some other borrowings extending to 2052 too. For context, its $3.7b cash position more than covers the $2.5b debt maturing in 2025 to 2026, and nearly covers 2027 maturities too.

Its interest coverage (based on adjusted EBITDA) stood at a healthy 8.5x (last-12-months 1H25), though it was slightly lower than FY24’s 9.0x figure. As before, we attribute this good interest coverage ratio to its low blended borrowing costs, underpinned by (i) an aggressive issuance schedule in 2019 – 2021 amidst lower global rates; and (ii) significant borrowings in lower-yielding currencies like JPY, EUR, and SGD (relative to USD).

Equinix retains a strong access to funding, including equity and fixed income markets. Its fixed income funding sources are also diversified by currency, including SGD (e.g. this issuance), and EUR (issued in May 2025), as well as other major currencies depending on its required funding needs and respective funding costs.

We think Equinix’s balance sheet remains robust, and its healthy access to funding should allow it to tap capital markets at reasonable rates to support more capex and expansion under its Build Bolder strategy.

About the bonds

We think these Equinix bonds look attractively priced, compared to its peers and to benchmark government yields. The IPG of 3.15% represents a spread of around 166bps over 5y SGS yields (1.49%) and around 134bps over 10y SGS yields (1.81%), which are fairly sizeable in today’s environment of compressed spreads.

(Our analysis assumes the final price guidance is revised downward by a typical amount i.e. not too significantly.)

First, we prefer these bonds to STTGDC’s 2028 bonds. STTGDC is a similar data-centre player, but offers a much lower yield. Meanwhile, Equinix bondholders can benefit from (i) increased transparency and visibility with financials given its quarterly reporting cycle (STTGDC is unlisted and has no reporting requirements); and (ii) investment-grade rating (STTGDC bonds are unrated).

Second, we compare these bonds with Mapletree Industrial Trust’s 2029 bonds and CapitaLand Ascendas REIT’s 2030 and 2034 bonds. These are investment-grade issuers like Equinix, and both have some data-centre exposure in their portfolios too (56% and 9% of assets respectively). Similarly, we see an attractive yield pickup for this new issuance, especially compared to the similarly-rated bonds from Mapletree (BBB+).

Finally, we look at non-bank investment-grade bonds with roughly a 7-year tenor. The two examples below (Optus Finance Pty Ltd & CapitaLand Integrated Commercial Trust) have virtually no direct data centre exposure, but we included them to illustrate yield levels in the corporate space. These two A- rated bonds (one notch higher than Equinix’s) have indicative yields of about 2.40%, translating to a 75bps yield pickup based on the 3.15% IPG, and likely a still-decent pickup when the final price guidance (FPG) eventually comes in.

To summarise, we think these new bonds look attractive particularly for conservative investors looking to lock-in yields on a solid issuer like Equinix.

Table 1: Peer comparison (new issue bolded)

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

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