Meta Pays 7.5% on $12.5 Billion Data Centre Debt to Keep Its AI Dream Alive

Meta Platforms is paying about 7.5% to borrow $12.5B (£9.4B) for a new artificial intelligence data centre, and the debt will not sit on the company's own balance sheet.

The bonds were priced on 27 July through Sopaipilla Investor, a holding company tied to BlackRock, funding a roughly one-gigawatt campus in El Paso, Texas. At about 7.5%, the yield is roughly half a percentage point above what Meta paid on a comparable financing nine months ago.

On debt this size, that gap adds tens of millions of dollars in interest a year.

Why Meta's $12.5B Debt Stays off Its Balance Sheet

The structure keeps Meta at arm's length. BlackRock funds, through Global Infrastructure Management and HPS Investment Partners, hold 80% of the project, with Meta owning the other 20% and serving as developer, operator, and sole tenant. The joint venture is valued at about $14B (£10.5B). Meta contributed land and partly built assets worth roughly $2.3B (£1.7B), and took a $1B (£750M) distribution as part of the arrangement.

The single tranche of amortising notes matures in 2048 and is secured by 20 years of Meta rent payments that begin in 2028. If Meta abandons the lease, it faces a steep penalty. The company has taken to naming these vehicles after fried dough. Last October's Louisiana deal ran through an entity called Beignet Investor. The Texas one is Sopaipilla.

The sale closed at about $12.5B after roughly a week of marketing, drawing orders near $20B (£15B), or 1.6 times the amount on offer, according to reports. JPMorgan and Morgan Stanley led the offering, the second-largest financing of its kind after Meta's own Hyperion deal. The notes still cleared at a spread of about 2.875 percentage points over 10-year US Treasuries, a level that held firm from the first day rather than tightening, as investment-grade deals usually do.

Why Meta's AI Borrowing Costs Are Climbing

Bond investors are demanding more to fund the AI build-out. The premium marks a shift from last autumn, when Meta's roughly $27B (£20.3B) Hyperion financing in Louisiana set a record for a data-centre bond sale and priced far tighter. Those bonds have since eased to about 96 cents on the dollar.

Meta's own corporate debt has moved too. Its 6.30% notes due 2056 recently touched their widest spread yet in secondary trading, about 58 basis points above where they sat in early June.

The caution extends across the sector. New AI-linked corporate bond issuance reached about $270B (£203B) by early July, close to double the total for all of 2025, according to Bank of America research. Technology firms are on course to spend roughly $2.5T (£1.9T) on AI this year. Amid concern over a possible AI bubble, investors are seeking a higher risk premium to keep lending.

Inside the BlackRock Data Centre Deal Behind Meta's AI Push

The El Paso campus covers about 1,000 acres and is due online in 2028, targeting close to one gigawatt of computing capacity. Meta has said its own investment there will pass $10B (£7.5B), supporting more than 300 permanent jobs and over 4,000 workers at peak construction.

Ratings agencies backed the design. S&P Global Ratings assigned the notes A+, one notch below Meta's AA- corporate grade, while Fitch marked them AA-. S&P analyst Viviane Gosselin called the arrangement 'a very robust structure.'

Off-balance-sheet financing lets Meta lock in computing power without carrying the full cost on its books, a template it first used in Louisiana. It is not alone in turning to debt. Alphabet, Amazon, Microsoft, and Oracle have all tapped bond markets to fund record AI spending.

More is likely to follow. Meta executives have told bankers the company may need to raise hundreds of billions of dollars for future AI infrastructure, with Blackstone among the firms in early talks. Demand, for now, held up. On its first day of secondary trading, the El Paso debt changed hands above face value, at about 103 cents on the dollar.