BlackRock Inc. is seeking to sell more than $12 billion in bonds to finance a Meta Platforms Inc. data center campus located in El Paso, Texas. This debt deal is the latest in a series aimed at funding tech companies' significant investments in artificial intelligence infrastructure. The bonds are being sold by a holding company representing BlackRock's 80% ownership stake in Project Sopaipilla Holdings, with Meta owning the remaining 20% of the data center project.
Bond investors are reportedly demanding higher yields, exceeding 7%, for the El Paso bonds. This represents a significant increase compared to the terms Meta secured nine months prior for its "Hyperion" data center project in Louisiana, which raised $27 billion. Some investors are requesting a risk premium of approximately 0.4 percentage points more than the Hyperion deal, reflecting a growing caution regarding increased AI exposure among lenders and a divergence in how the market prices AI debt.
BlackRock's infrastructure and private credit units, Global Infrastructure Management (GIP) and HPS Investment Partners, which BlackRock acquired, hold the 80% stake in Project Sopaipilla. This structure, where a special purpose vehicle majority-owned by a private capital partner raises debt against a long lease to a creditworthy tenant, allows Meta to keep a significant portion of the infrastructure spending off its balance sheet. However, the repricing of debt for the El Paso project indicates that investors are now evaluating AI infrastructure deals more on their intrinsic economics rather than relying on the previous "hyperscaler halo" associated with tech giants.
