BlackRock's $12.55 billion Meta (META.US) data center bonds bucked the trend and attracted gold, and 7.5% “garbage” high interest rate broke through the “cold current” of AI bonds

The Zhitong Finance App learned that at a time when global investors are increasingly anxious about the capital expenditure of tech giant Tianliang AI, BlackRock's $12.55 billion bond issued for the Meta Platforms (META.US) Texas data center project bucked the trend in early trading before official pricing on Monday. This investment-grade bond, led by J.P. Morgan Chase and Morgan Stanley, was issued with a yield of 7.534%. The yield level was close to the junk bond range, yet it successfully attracted the attention of investors.

This price trend is in stark contrast to the recent bleak performance when bonds of technology companies such as SpaceX (SPCX.US) were listed and then broken. At a time when market concerns over investment in AI infrastructure are growing, the deal reveals that capital is repricing AI risk — compensating for the unknown with higher returns rather than refusing to participate.

Transaction structure: “BlackRock template” for off-balance sheet financing

The bond was issued by the Special Purpose Entity (SPV) Sopaipilla Investor LLC until 2048. Project Sopaipilla Holdings LLC is 80% owned by BlackRock's subsidiaries (GIP and HPS Investment Partners), while Meta holds the remaining 20%.

The bonds are secured by Meta's rental income for a period of 20 years starting in 2028. This off-balance sheet financing model enables Meta to obtain critical AI computing power infrastructure without directly increasing its debt burden. The El Paso data center is expected to provide up to 1 gigawatt (GW) of computing power and is scheduled to go live in 2028, creating more than 300 jobs.

The arrangement follows the template first adopted by Meta in its Hyperion project in Louisiana — when BlackRock, as one of the investors, purchased more than $3 billion in bonds in the $27 billion private debt financing for the project.

Pricing game: 7.534% “garbage” yield

The bond is priced at 7.534%, which is a premium of about 287.5 basis points over 10-year US Treasury bonds. This level of yield is extremely rare among investment-grade bonds — usually more common in the high-yield junk bond market.

Behind this high yield is investors' reassessment of AI infrastructure risks. Compared to the Beignet bonds issued by Meta last year for the Louisiana Hyperion project (due in 2049), the new bonds provided a premium of about 0.4 percentage points. At the same time, the Hyperion project has significantly expanded in size from the initial $27 billion to over $50 billion.

According to subscription data, although the final subscription amount reached 20 billion US dollars last Friday, it is about 1.6 times the planned issuance scale, which is lower than the subscription ratio of about 4 times the average bond issuance this year. However, in the end, high yields attracted enough buyers to strengthen bonds in the secondary market.

AI debt flood: $5.5 trillion in financing

The deal is the latest wave of AI infrastructure debt financing. According to estimates by J.P. Morgan strategists, big tech companies are expected to invest about 5.5 trillion US dollars in AI by 2030, most of which will be funded through the debt market.

Technology companies issue huge bonds in large numbers, making it difficult for investors to digest, and weakening their demand for new bonds related to artificial intelligence. The recent wave of overall sell-off in technology bonds has also made investors more cautious.

This wave is changing the capital structure of technology companies. Alphabet has raised the maximum capital expenditure forecast for the full year by $15 billion, causing a sharp drop in stock prices; Meta itself raised its 2026 capital expenditure guidelines to 125 billion to 145 billion US dollars. Amazon has reportedly initiated a debt issuance program of at least $25 billion. BlackRock's AI partnership with Microsoft has raised $12.5 billion to date.

Market Signals: From SpaceX's Breakout to SopaiPilla's Rebound

The positive performance of Sopaipilla bonds is in stark contrast to the recent weakness of other AI-related bonds. The $25 billion bond issued by SpaceX in June (due in 2056) continued to decline in the secondary market, and the yield has climbed to 7.5%, which is also comparable to junk bonds. This BBB-grade bond is priced at a premium of 175 basis points over the same period treasury bonds, making it one of the worst performing targets among all US dollar BBB-grade benchmark bonds.

Analysts pointed out that the weakness of SpaceX bonds is due in part to insufficient liquidity in the secondary market and investors' cautious attitude towards ultra-long-term AI bonds. In contrast, the rebound of Sopaipilla bonds shows that as long as the yield is high enough, the market still has capital willing to take AI risks.

The “new normal” of AI infrastructure financing

The success of BlackRock's $12.55 billion bond reveals that AI infrastructure financing is entering a new phase.

High yields are becoming the “standard” for AI bonds — the 7.534% coupon was almost unimaginable until 2023, but is now necessary to attract capital. The off-balance sheet financing model is becoming a standard operation for tech giants — moving debt off the balance sheet through SPV not only satisfies AI computing power requirements, but also avoids the impact of direct debt accumulation on credit ratings. BlackRock is transforming from a simple asset manager to a “capital architect” for AI infrastructure — from Hyperion in Louisiana to Sopaipilla in Texas, the world's largest asset management company is using “other people's money” to build physical infrastructure for the AI era.

For investors, the 7.5% yield provides a sufficient safety cushion to offset the uncertainty of investing in AI — at least until the next earnings season.