The guidance provides a clear foundation for sponsors, underwriters, and investors to structure and execute data center securitizations with greater certainty and efficiency.
By Kevin T. Fingeret, David G. Siegel, Matt Hays, Michele M. Anderson, Rolaine Soril Bancroft, and Ben Meeks
Key Points:
- Latham & Watkins obtained guidance from SEC Staff confirming that data center securitizations fall outside the definition of Exchange Act ABS.
- Since the inaugural issuances in 2018, lack of certainty about whether data center securitizations would be classified as Exchange Act ABS led market participants to voluntarily comply with certain rules out of an abundance of caution.
- The guidance reduces the cost to execute data center financings and supports access to capital.
On July 29, 2026, Latham & Watkins obtained SEC Staff guidance confirming that data center securitizations fall outside the statutory definition of an “asset-backed security” under Section 3(a)(79) of the Securities Exchange Act of 1934, commonly referred to as “Exchange Act ABS.”
The new guidance, which is set forth in this Latham letter, is a landmark development for the digital infrastructure finance market.
Since the inaugural issuance in 2018, Latham has advised on nearly all data center securitizations. During this period, lack of certainty about whether data center securitizations would be classified as Exchange Act ABS has led market participants to voluntarily comply with rules intended for Exchange Act ABS out of an abundance of caution. This voluntary compliance has increased the complexity and cost of the structuring and issuance process as the market continues to grow. The SEC Staff’s guidance in response to the Latham letter now provides clarity, thereby reducing unnecessary compliance costs and regulatory hurdles. The guidance positions data center securitizations for continued growth and enhanced access to the capital markets.