Meta Faces Higher Costs for $12 Billion Texas Data Center

Meta Platforms is facing higher borrowing costs for a $12 billion financing deal intended to support a nearly one-gigawatt data center in El Paso, Texas. Bond investors are pushing for yields above 7%, which is approximately 0.4 percentage points higher than the yields Meta secured for its $27 billion Hyperion project in October.

This increase in cost reflects growing investor caution regarding artificial intelligence lending, following a period of significant borrowing by major technology firms and a recent selloff in AI-linked equities. To keep the debt off its primary balance sheet, the company structured the financing so that a BlackRock-owned vehicle will hold 80% of the project while Meta retains a 20% stake.

The deal involves 2048 bonds secured by 20 years of rent payments from Meta, which are scheduled to begin in 2028. Credit rating agencies have provided mixed assessments of the notes, with S&P Global Ratings assigning an A+ rating, while Fitch Ratings and KBRA both assigned a rating of AA-.