Nebius ($NBIS) announced on August 19 that it intends to sell $4.50 billion of convertible senior notes to qualified institutional buyers under Rule 144A, in two series: $2.75 billion due February 15, 2030 and $1.75 billion due February 15, 2034, with an option for the initial purchasers to take a further $375 million and $300 million. The notes are senior and unsecured. Proceeds go to data centre construction, the AI cloud platform, footprint expansion and GPU procurement.
The timing is not subtle. The Vineland planning board approved Phase 2 of the New Jersey campus on August 18. The financing launched the next morning.
But the interesting sentence in the release is not the size. It is this one:
The interest rate, initial conversion rate, the accretion schedule and other terms for each series of Notes will be determined at the pricing of the offering.
The accretion schedule. Nebius does not issue ordinary convertibles. It issues convertibles whose principal grows, and that structure — not the coupon — is where the cost of this company's debt actually lives.
What "accretion" does to a 1% coupon
Every convertible Nebius has sold since June 2025 was issued at par and repays more than par. From the FY2025 20-F:
- The June 2025 notes: $500M of 2.00% notes due 2029, accreting to 120% of original principal at maturity, and $500M of 3.00% notes due 2031, accreting to 125%.
- The September 2025 notes: $1.58B of 1.00% notes due 2030 and $1.58B of 2.75% notes due 2032, both accreting to 115%.
- The March 2026 notes: $2.25B of 1.250% notes due March 2031 and $1.75B of 2.625% notes due March 2033, both accreting to 120%. A partial over-allotment took the original principal to about $4.34 billion.
So a holder of the September 2030 notes receives a 1.00% coupon and, at maturity, $1,150 for every $1,000 lent. A holder of the June 2031 notes receives 3.00% and $1,250 per $1,000.
That is not a nuance buried in an indenture. It is on the face of the balance sheet, and Nebius books it as interest. The carrying-value table at 2025-12-31 gives the effective interest rate on each series next to the stated one:
| Series | Stated rate | Effective rate |
|---|---|---|
| 2029 Notes | 2.00% | 7.06% |
| 2030 Notes | 1.00% | 4.15% |
| 2031 Notes | 3.00% | 6.87% |
| 2032 Notes | 2.75% | 4.88% |
Three to five points of the cost of this debt is invisible in the coupon. The same table shows $4,836.8 million of principal payable at maturity against a $4,103.2 million carrying amount — a $650.4 million unamortised discount that runs through interest expense between now and the maturities, plus $83.2 million of issuance costs. Interest expense was $119.1 million in Q2 alone, against $4.8 million a year earlier, and the accretion is part of why.
On the March 2026 notes the same arithmetic is available without waiting for a filing: $4.3375B of original principal accreting to 120% is $5.205 billion repayable, so $867.5 million of accretion on top of coupons of 1.250% and 2.625%. Discount those cash flows and the all-in rate is roughly 4.9% on the 2031s and 5.1% on the 2033s before issuance costs — that is our arithmetic, not a filed number, and the filed effective rate will land above it, because on the 2025 notes issuance costs pushed the filed figure about half a point past the same calculation.
What the new $4.5 billion costs
We do not know, and neither does anybody else quoting the deal today. The interest rate, the conversion price and the accretion premium are all set at pricing, which has not happened.
This is where most write-ups of a convertible offering quietly supply a number. We are not going to. What we can do is bound it with Nebius's own three precedents, which are 115%, 120% and 125%:
| If the August notes accrete to | Accretion on $4.50B | Repaid at maturity |
|---|---|---|
| 115% | $675M | $5.175B |
| 120% | $900M | $5.400B |
| 125% | $1,125M | $5.625B |
Those are the endpoints of what this issuer has done four times in fourteen months, not a forecast of what it will do this time. The point of the range is its floor: $4.50 billion announced is not $4.50 billion repayable, and on this issuer's own record the gap has never been smaller than $675 million.
The chart at the top of this piece is the whole ledger — every series, its coupon, its accretion premium and what it repays.
The other half of the announcement
Alongside the offering, Nebius said it expects to enter privately negotiated exchange agreements with holders of the 2.00% notes due 2029 and the 3.00% notes due 2031 to swap part of those notes for Class A ordinary shares. Terms are individually negotiated per holder, and the release notes that participating holders may sell the shares or unwind hedges — activity the company says "could decrease (or reduce the size of any increase in) the market price of the Class A shares."
That is the company telling you, in the same document, that it is issuing equity-linked debt and converting older equity-linked debt into equity.
The June 2025 notes convert at approximately $51.45 per Class A share. The September 2025 notes convert at $138.75. The March 2026 notes convert at $183.22 and $180.31 — struck at premiums of 57.5% and 55.0% over a $116.33 close on March 17. The build-time snapshot in this repo carries NBIS at $274.38; that is a stale figure by construction, not a live quote, but it does not need to be precise to make the point. Every conversion price above it is well below it.
Add the outstanding pre-August converts at their conversion prices and the share count they represent is:
| Series | Principal | Conversion price | Shares |
|---|---|---|---|
| June 2025, both series | $977.5M | $51.45 | 19.00M |
| September 2025, both series | $3,162.5M | $138.75 | 22.79M |
| March 2026, due 2031 | $2,587.5M | $183.22 | 14.12M |
| March 2026, due 2033 | $1,750.0M | $180.31 | 9.71M |
| Total | 65.62M |
Against 271,855,218 shares outstanding at 2026-06-30, that is 24.1%. It is derived arithmetic on disclosed conversion rates, it ignores anti-dilution adjustments and any make-whole increase, and the August notes are not in it because their conversion price does not exist yet.
It also explains the accretion in one line. Conversion is settled on original principal, not the accreted amount. The growing principal is what Nebius pays if the notes are not converted — and with every conversion price struck below the current share price, the more likely outcome is shares.
The denominator: who is actually funding the build
Set the offering against the year. Assembled from the Q2 2026 capture and the two 2026 offerings:
| 2026 funding source | Amount | Kind |
|---|---|---|
| Convertible notes, March | $4.34B | disclosed |
| Convertible notes, August | $4.50B | announced, not priced |
| ATM equity, 12.7M Class A at $223.60 average | $2.84B | disclosed |
| Secured GPU facility, July, SOFR + 2.50% | $0.78B | disclosed |
| Capital markets subtotal | $12.45B | |
| Customer prepayments expected in 2026 | >$9B | CFO statement on the call |
| Total | ~$21.4B |
Against a full-year capex guide of $20–25 billion, that is 86% to 107% of the build. Two warnings before anyone quotes that range. The capex guide appears only on the earnings call — no Nebius filing contains it, and our transcript capture is labelled non-authoritative for exactly that reason. And the largest single line in the stack, the >$9 billion of prepayments, is a CFO expectation for the year rather than a contracted or filed number:
"In total, customers' prepayments will bring in more than $9 billion of upfront funding this year, directly reducing the capital we need from debt and equity." — Dado Kim, CFO, Q2 2026 call
Take the prepayments out and the capital-markets total of $12.45B covers half to five-eighths of the guided capex. Leave them in and customers are the single biggest source of Nebius's 2026 funding — 42% of the stack, larger than either convertible — but they are still not the larger half. Capital markets are 58%. A framing going round that customers now fund more of the build than markets do does not survive the addition.
What the prepayments have already done is visible in the filing rather than the call. Deferred revenue went from $1,577.5M at 2025-12-31 to $5,975.2M at 2026-06-30 — a $4.4B build in six months, and 57.8% of the company's entire $10,340.5M of shareholders' equity. About 70% of Q2 deals carried prepayments covering 50–60% of the associated capex, an all-time high.
There is one more line worth reading against the offering. The CFO gave a priority order for the capital stack on the same call: operating cash flow and customer prepayments first, then asset-backed debt, then limited corporate debt, and equity-linked financing last. Seven days later the company announced $4.5 billion of equity-linked financing. That ordering is a transcript quote and not a filed commitment, so it is a tension rather than a contradiction — but it is the tension the pricing terms will resolve.
Where the leverage sits after this
Debt at 2026-06-30 was $8,545.7 million ($8,499.0M non-current, $46.7M current) against $10,340.5 million of shareholders' equity. Add the July facility and the announced notes at face and the pro-forma figure is roughly $13.8 billion, or 1.34× equity — a mixed-basis number, since the Q2 figure is a carrying amount net of unamortised accretion and the additions are face.
Against the guided FY2026 revenue of $3.0–3.4B that is 4.1× to 4.6× revenue. Against the guided exit ARR of $7–9B it is 1.5× to 2.0×. H1 capex ran at 8.3× H1 revenue. None of that is unusual for infrastructure built ahead of demand. All of it depends on demand arriving on the schedule the $40 billion of customer commitments describes — and on prices per megawatt that we have already argued are being compared badly across this sector.
What to watch
- The pricing release, and specifically the accretion schedule. The premium — 115%, 120%, 125% or something new — is the single figure that turns $4.50 billion announced into a repayable amount.
- The initial conversion price and premium. March's struck at 57.5% and 55.0% over spot. A materially thinner premium on a stock that has roughly doubled since March would say something about demand for the paper.
- How much of the 2029 and 2031 notes actually gets exchanged for shares, and at what effective valuation. The release is explicit that nothing is committed.
- Whether the $675 million over-allotment is exercised. March's was, partially, adding $337.5M.
- The Q3 carrying-value table, which will be the first filed disclosure of the effective interest rate on the March 2026 notes — and the first check on whether our 4.9%/5.1% arithmetic is close.
The August 2026 offering terms — $4.50B in two series ($2.75B due February 15, 2030; $1.75B due February 15, 2034), the $375M and $300M over-allotment options, the February 21, 2028 and August 21, 2028 redemption dates, the senior unsecured ranking, the accreted principal amount mechanic, the exchange agreements with holders of the 2.00% 2029 and 3.00% 2031 notes, and the statement that rate, conversion rate and accretion schedule are set at pricing — are from the company's 6-K exhibit filed August 19, 2026. Coupons, accretion premiums (120%/125% for the June 2025 notes, 115%/115% for the September 2025 notes), original principal amounts, conversion prices of $51.45 and $138.75, the 2025-12-31 carrying-value table (principal at maturity $4,836.8M, carrying $4,103.2M, unamortised discount $650.4M, issuance costs $83.2M) and the effective rates of 7.06%, 4.15%, 6.87% and 4.88% are from Nebius's FY2025 20-F filed April 30, 2026. The March 2026 terms — $4.0B upsized from $3.75B, 1.250% due March 15, 2031 and 2.625% due March 15, 2033, conversion prices of $183.22 and $180.31 at premiums of 57.5% and 55.0% over a $116.33 close on March 17, 2026, 120% accretion, effective conversion prices of $219.86 and $216.37 at maturity, and net proceeds of ~$3.96B — are from the March 17, 2026 pricing release; the partial over-allotment taking original principal to ~$4.34B is from the 20-F subsequent-events note. Q2 balance-sheet and prepayment figures — debt $8,545.7M, shareholders' equity $10,340.5M, deferred revenue $5,975.2M from $1,577.5M, interest expense $119.1M, shares outstanding 271,855,218, H1 revenue $981.3M and H1 capex $8,130.3M, the $2.8B ATM at a $223.60 weighted average, the $775M July secured facility, ~70% of deals carrying prepayments covering 50-60% of capex, and >$40B of customer commitments — are from our Q2 2026 capture of the August 12 release. The FY2026 capex guide of $20-25B, the revenue guide of $3.0-3.4B, the exit-ARR guide of $7-9B, the >$9B prepayment expectation and the CFO's stated funding priority order exist only on the Q2 earnings call and reach us through a third-party transcript we treat as non-authoritative; the >$9B figure is an expectation for the year, not a contracted or filed amount. The $5.205B March repayment, the $675M-$1,125M August accretion range, the ~4.9% and ~5.1% all-in rates, the 65.62M convertible shares and 24.1% of shares outstanding, the $12.45B capital-markets subtotal, the 42%/58% split, the 86-107% funded range, the 57.8% deferred-revenue-to-equity ratio and the ~$13.8B pro-forma debt figure are R40 arithmetic on the figures above. The $274.38 share price is the build-time snapshot committed in this repo, not a live quote, and diverges from the price shown on Nebius's stock page from the moment of commit; it is used here only to establish that it sits above every disclosed conversion price. The August 18 Vineland Phase 2 approval reaches us through local press coverage of the planning board vote rather than a filing.
