BlackRock raises US$12.5 billion of debt for Meta data centre
The 2048 note sells at a yield premium of 2.875 percentage points over 10-year Treasury yields, according to a source
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[NEW YORK] BlackRock wrapped up a US$12.5 billion bond sale tied to a Meta Platforms data centre project in Texas after a nearly week-long marketing process and a sell-off in big tech debt.
The 2048 note sold at a yield premium of 2.875 percentage points over 10-year Treasury yields, according to a person with knowledge of the matter.
The pricing was in line with initial discussions, making it a rare case of an investment-grade bond deal that failed to tighten during the syndication process.
The deal ended up about US$273 million larger than expected when it launched, the person said, asking not to be identified because the discussions are private.
The bonds also rallied in early trading on Monday (Jul 27), suggesting investor demand strengthened after a lackluster reception last week.
Investor appetite for financing artificial intelligence infrastructure has faded in the US high-grade debt market following a glut of jumbo offerings and growing concerns over whether massive investments in data centres will pay off.
The new notes – offered by a BlackRock-tied firm named Sopaipilla Investor – drew as much as US$20 billion of orders, or just about 1.6 times the amount for sale, according to people with knowledge of the matter.
Borrowers typically aim to generate demand multiple times the size of a bond offering to get optimal pricing.
Proceeds will fund a data centre campus in El Paso, Texas that is expected to provide as much as one gigawatt of computing capacity for AI workloads.
BlackRock subsidiaries Global Infrastructure Management and HPS Investment Partners hold an 80 per cent stake in the project, with Meta owning the remaining 20 per cent.
JPMorgan Chase and Morgan Stanley managed the debt offering.
The bond sold at a yield premium to where the Beignet notes, sold in October to help finance a Meta data centre in Louisiana, currently trade.
The Sopaipilla transaction, named after a fried pastry popular in southwestern US, resembles a project finance loan.
Such 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 centre lease. BLOOMBERG
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