Meta Platforms NASDAQ:META fell 0.21% premarket as bond investors pushed for higher yields on a $12 billion financing backing its data center in El Paso, Texas. Early discussions point to yields above 7%, with some investors seeking roughly 0.4 percentage points more than on Meta's Hyperion project, which raised $27 billion in a record corporate bond sale in October, according to people familiar with the matter. Terms could still change.
The gap reflects growing caution around AI lending after months of heavy borrowing by large technology companies, alongside a selloff in AI-linked equities. Bonds from the Hyperion deal were trading at about 96 cents on the dollar Thursday. On a deal this size even a tenth of a percentage point could add millions in annual interest.
The structure keeps the debt off Meta's balance sheet. A vehicle owned by BlackRock NYSE:BLK will hold 80% of the nearly one-gigawatt project with Meta retaining 20%, and the 2048 bonds are secured by 20 years of Meta rent payments starting in 2028 rather than by physical assets. S&P rated the notes A+, a notch below Meta's corporate rating, while Fitch and KBRA matched it at AA-.