Nextdc (ASX:NXT) is issuing AU$1 billion in hybrid securities, giving the company flexible funding options for its data center expansion, Jefferies said in a note on Tuesday, noting it is well financed in the short term amid disruptions in credit markets in the wake of US-Iran conflicts.

The investment firm said the hybrid issuance reduces the pressure of an equity raise in the short-term, giving the data operator "ample headroom" within its debt covenant limits.

Following the hybrid issuance, Nextdc will have AU$5.2 billion in pro forma liquidity along with AU$278 million in cash, providing runaway to fund about 250 megawatts of new data center build-out over the next two years.

Jefferies maintained its buy rating but cut its price target to AU$16.60 from AU$18.70 due to higher long-term debt costs.