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Meta raised another $12 billion to build data centers, but this time the cost of borrowing money became more expensive

2026-07-26·newswire-us-stock-080002
Meta raised another $12 billion to build data centers, but this time the cost of borrowing money became more expensive.

Bond investors are seeking higher yields as the market reprices the higher risks of financing artificial intelligence (AI).

The progress of Meta’s latest $12 billion data center financing shows that investors’ risk premium on artificial intelligence-related debt is rising significantly, meaning that the company’s borrowing costs have increased significantly compared with the previous transaction nine months ago.

Meta's nearly 1-gigawatt data center project in El Paso, Texas, is preparing to issue bonds through a special purpose entity owned by BlackRock, with an annual yield of more than 7% in preliminary discussions, people familiar with the matter told the media.

In response, some investors have demanded a risk premium that is about 0.4 percentage points higher than the Hyperion data center transaction completed by Meta in October last year. It is reported that the Hyperion project raised US$27 billion through a record corporate bond issuance in October last year.

Higher debt costs reflect lenders becoming increasingly wary of Big Tech companies' growing exposure to artificial intelligence-related risks. And AI-related stocks also fell sharply as investors began to worry about the sustainability of the industry's boom.

Some credit investors commented, "When you issue billions of dollars of bonds, even if the cost increases by 0.1 percentage point, it will increase the interest expense by tens of millions of dollars every year.

In a high-rated market, the impact is very significant." Price negotiations for the Meta El Paso data center are in the early stages and could still change when the deal is officially launched next Monday. special purpose vector architecture Meta’s financing continues the structural design of the previous transaction.

The new bonds will be issued through a special purpose vehicle called "Sopaipilla Investor" (named after the popular fried pastry in South America), and the previous Hyperion data center deal was issued through a special purpose vehicle called "Beignet Investor" (named after the specialty Louisiana dessert).

S&P analyst Viviane Gosselin said the deal was "almost a carbon copy of the previous deal." Borrowing debt through project entities rather than corporate entities has become the mainstream way for technology companies to raise funds while keeping their balance sheets tidy in the artificial intelligence arms race.

Last month, Anthropic also completed US$35 billion in financing through a financing plan supported by GPU leases and Broadcom guarantees. In terms of bond structure, the bonds issued by Sopaipilla will mature in 2048 and are guaranteed by Meta’s rent payments for 20 years starting in 2028. Meta has four lease renewal options every four years.

If you exit early, you will have to pay a high penalty, which provides strong protection for the lender. In addition, Meta also assumes construction risk and is responsible for covering cost overruns that exceed the initial budget by more than 105%.

However, because Meta does not provide a direct mortgage on the physical assets, it means that if the site encounters a serious unexpected event that delays the project for more than 18 months, Meta can also terminate the lease agreement without any penalty.

#Stocks #Nvidia #Meta #AI #Semiconductors

Full text

Meta raised another $12 billion to build data centers, but this time the cost of borrowing money became more expensive

Bond investors are seeking higher yields as the market reprices the higher risks of financing artificial intelligence (AI). The progress of Meta’s latest $12 billion data center financing shows that investors’ risk premium on artificial intelligence-related debt is rising significantly, meaning that the company’s borrowing costs have increased significantly compared with the previous transaction nine months ago.

Bond investors are seeking higher yields as the market reprices the higher risks of financing artificial intelligence (AI). The progress of Meta’s latest $12 billion data center financing shows that investors’ risk premium on artificial intelligence-related debt is rising significantly, meaning that the company’s borrowing costs have increased significantly compared with the previous transaction nine months ago. Meta's nearly 1-gigawatt data center project in El Paso, Texas, is preparing to issue bonds through a special purpose entity owned by BlackRock, with an annual yield of more than 7% in preliminary discussions, people familiar with the matter told the media. In response, some investors have demanded a risk premium that is about 0.4 percentage points higher than the Hyperion data center transaction completed by Meta in October last year. It is reported that the Hyperion project raised US$27 billion through a record corporate bond issuance in October last year. Higher debt costs reflect lenders becoming increasingly wary of Big Tech companies' growing exposure to artificial intelligence-related risks. And AI-related stocks also fell sharply as investors began to worry about the sustainability of the industry's boom. Some credit investors commented, "When you issue billions of dollars of bonds, even if the cost increases by 0.1 percentage point, it will increase the interest expense by tens of millions of dollars every year. In a high-rated market, the impact is very significant." Price negotiations for the Meta El Paso data center are in the early stages and could still change when the deal is officially launched next Monday. special purpose vector architecture Meta’s financing continues the structural design of the previous transaction. The new bonds will be issued through a special purpose vehicle called "Sopaipilla Investor" (named after the popular fried pastry in South America), and the previous Hyperion data center deal was issued through a special purpose vehicle called "Beignet Investor" (named after the specialty Louisiana dessert). S&P analyst Viviane Gosselin said the deal was "almost a carbon copy of the previous deal." Borrowing debt through project entities rather than corporate entities has become the mainstream way for technology companies to raise funds while keeping their balance sheets tidy in the artificial intelligence arms race. Last month, Anthropic also completed US$35 billion in financing through a financing plan supported by GPU leases and Broadcom guarantees. In terms of bond structure, the bonds issued by Sopaipilla will mature in 2048 and are guaranteed by Meta’s rent payments for 20 years starting in 2028. Meta has four lease renewal options every four years. If you exit early, you will have to pay a high penalty, which provides strong protection for the lender. In addition, Meta also assumes construction risk and is responsible for covering cost overruns that exceed the initial budget by more than 105%. However, because Meta does not provide a direct mortgage on the physical assets, it means that if the site encounters a serious unexpected event that delays the project for more than 18 months, Meta can also terminate the lease agreement without any penalty.

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