BlackRock Kicks Off $12.3 Billion Bond Sale for Meta Data Center
BlackRock Inc. began marketing $12.3 billion of high-grade bonds to fund a Meta Platforms Inc. data center project, testing investor appetite amid growing concerns about excessive AI infrastructure spending.
Sopaipilla Investor, a holding company tied to BlackRock, is offering a single tranche of notes due in 2048, according to a person familiar with the matter. Price talk is a premium of about 2.875 percentage points over Treasuries, the person said, asking not to be identified because they aren’t authorized to speak publicly.
Proceeds from the sale will fund a data center campus in El Paso, Texas, expected to provide as much as 1 gigawatt of computing capacity for artificial intelligence workloads. BlackRock subsidiaries Global Infrastructure Management and HPS Investment Partners hold an 80% stake in the project, with Meta owning the remaining 20%.
JPMorgan Chase & Co. and Morgan Stanley are running the offering, which is expected to price next week, the person added.
It comes at a time when the flood of jumbo-bond offerings by technology firms have stretched investors’ ability to absorb the supply, eroding appetite for new AI-related debt. The market backdrop deteriorated further this week after Alphabet Inc. increased its capital spending forecast, reigniting concerns over whether massive AI investments will pay off. Risk appetite was also dented by a surge in oil prices amid the escalating war in Iran.
The Sopaipilla transaction — named after a fried pastry popular in southwestern US — resembles a project finance loan, where debt is issued by a special-purpose vehicle, the principal is gradually repaid over time and the obligations are backed by Meta’s lease commitments.
The structure allows Meta to raise the money off balance sheet, easing woes about excess borrowing, while making investors comfortable with the risk because the social media giant backs the debt through the data center lease.
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