AI infrastructure breaks the bank! Meta (META.US) completes nearly $30 billion data center financing, setting a new template for tech giants with an off-balance-sheet structure.

Mark Zuckerberg's Meta (META.US) is reportedly finalizing a nearly $30 billion financing plan for its data center campus in a rural area of Louisiana, marking the completion of the largest ever private capital transaction. According to sources, Blue Owl Capital Inc. and Meta will jointly own the Hyperion data center campus in the Richland Parish of Louisiana, with the tech giant retaining only 20% of the shares. To support the construction of the campus, Morgan Stanley has set up a special purpose entity (SPV), arranging over $27 billion in debt financing and around $2.5 billion in equity financing a structure increasingly common for large transactions. Morgan Stanley initiated preparations for the transaction earlier this year, with various asset management companies and infrastructure lending institutions seeking to participate. Ultimately, Pimco and Blue Owl Capital emerged as the winners. Meta, Morgan Stanley, Pimco, and Blue Owl Capital spokespersons all declined to comment on the matter. This financing will serve as a reference template for other hyperscalers, helping them advance the construction of large data center campuses while avoiding negative impacts on their credit ratings these companies are currently taking on significant debt to address high construction costs. Data compiled by Bloomberg shows that as of the end of September in the U.S. bond market, technology companies' financing amounted to approximately $157 billion, a 70% increase from the same period last year. According to sources, under the SPV structure design, the financing funds will not be borrowed directly by Meta but will be raised by the SPV. Meta will act as the developer, operator, and tenant of the project, which is expected to be completed by 2029. This structure helps tech companies avoid taking on a substantial debt load on their balance sheets, while providing Wall Street investors with opportunities to invest in physical assets with investment-grade quality. With insurance companies and other types of investors seeking asset-backed debt products, the demand for structured investments is increasing. Elon Musk's AI startup xAI has also used a similar structure in its latest $20 billion funding round the company only leases chips rather than owning them outright. Unnamed sources reported that on October 16, the final step of determining the bond issuance price in the form of 144A private placements was completed, with Pimco serving as the anchor investor. A few investors will receive a portion of the bond allocation, with the bonds maturing in 2049 and being fully amortizing. One source added that the expected issuance rate for the bonds is approximately 225 basis points higher than the U.S. Treasury yield. Morgan Stanley is the exclusive bookrunner for the transaction, according to a report, with an A+ investment-grade rating from S&P Ratings. Hyperion is Meta's largest data center out of its global 29 data centers, covering a total area of 4 million square feet in a rural area of Louisiana. When running at full capacity, it is estimated that the data center campus will have a maximum power consumption of 5 gigawatts, roughly equivalent to the total power consumption of 4 million American households. Morgan Stanley, providing advisory services for this transaction for Meta, continues to focus on the field of artificial intelligence: in June this year, the institution provided advice for xAI's corporate bond issuance; currently, it is also underwriting high-yield bonds (junk bonds) for the cryptocurrency mining company TeraWulf Inc. The data center campus in Louisiana is just one of several large data centers that Meta is constructing. Earlier this week, the company announced plans to build another gigawatt-scale data center campus in El Paso, Texas, while also advancing the construction of a large data center in Ohio.