Meta's newest data centre financing is landing with higher borrowing costs, as bond investors demand a bigger premium than they accepted on a similar deal nine months ago. The $12bn BlackRock-led sale backs a nearly one-gigawatt project in El Paso, Texas, and signals growing caution over AI-linked debt.
Bond investors want significantly higher yields on the latest $12bn Meta-backed data centre deal than they accepted just nine months ago, as markets price in higher risks around AI financing. The nearly one-gigawatt project in El Paso, Texas, will sell bonds through a special-purpose vehicle owned by BlackRock, offering yields above 7% in early discussions.
Investors demand a bigger premium
Some buyers are asking for a risk premium of roughly 0.4 percentage points over Meta's earlier "Hyperion" deal. That project raised $27bn in a record-breaking corporate bond sale last October. Bonds tied to that Louisiana project, sold through a vehicle called Beignet Investor, traded at about 96 cents on the dollar on Thursday.
Those higher costs reflect lenders' growing wariness of their AI exposure after a borrowing spree led by Big Tech, and they arrive alongside a heavy sell-off in AI-linked stocks. The structure is not unique to Meta: Anthropic borrowed $35bn last month through a package backed by GPU leases and a Broadcom guarantee.
How the deal is built
The new debt will be sold by a vehicle named Sopaipilla Investor, which will hold an 80% stake in the Texas project, with Meta owning the remaining 20%. BlackRock, the lead sponsor, recently completed a $40 billion acquisition of Aligned Data Centers, expanding its AI infrastructure footprint. The campus is designed to deliver roughly one gigawatt, enough to power about 750,000 homes.
Sopaipilla's bond, maturing in 2048, is secured by Meta's 20-year rent payments beginning in 2028. Meta is also shouldering construction risk, covering any cost overruns beyond 105% of the initial budget, though there is no direct pledge of physical assets.
Ratings back the structure
S&P assigned the notes an A+ rating, one notch below Meta's AA-, while Fitch and KBRA rated them AA-, matching Meta's corporate grade. S&P analyst Viviane Gosselin likened it to the earlier financing: "It's pretty much a carbon copy of its previous deal". JPMorgan and Morgan Stanley are running the sale, which could launch as soon as next Monday.
Sources: Financial Times, Crypto Briefing
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