For months, Big Tech has flooded debt markets with mega bonds that were initially snatched up by investors keen to get exposure to the artificial intelligence boom. As demand wanes and bubble concerns mount, those deals are becoming harder and costlier to get over the line.
BlackRock Inc. sold a $12.5 billion bond Monday at a hefty yield of 7.53%, one of the highest levels for a blue-chip data-center debt offering since the AI borrowing binge started last year, according to Bloomberg-compiled data.
The notes, which will help finance a data center in Texas tied to Meta Platforms Inc., offered a premium of about 2 percentage points more than the average for similarly-rated debt with A or AA credit scores.
With more than $570 billion of AI-related debt raised across the globe since 2025, borrowing costs have soared. The frenzy, which has pushed credit to its limits even as more deals are planned, has also triggered jitters in the market where banks and others hedge against the risk that the investments won’t pay off.
Credit-default swaps on companies including Meta, Oracle Corp, Alphabet Inc. and SpaceX have jumped as a result.
Demand for the BlackRock deal peaked at just $20 billion, or roughly 1.6 times the deal size. That ranks as the lowest for an AI high-grade jumbo bond sale in the US, and far less than the average of about four times on offerings this year, the Bloomberg-compiled data show. Borrowers typically aim to generate demand multiple times the size of a bond offering to get optimal pricing.
Meta and BlackRock plan to build a 1-gigawatt data center complex in Texas that will cost about $14 billion to develop. The bond will help finance the project.
The debt brings together investors from BlackRock’s two big recent acquisitions — for Global Infrastructure Partners and for HPS Investment Partners — and pushes it further into an increasingly competitive landscape to help finance the AI boom. Rivals Blue Owl Capital Inc. and Blackstone Inc. have so far led the biggest data center financings.
JPMorgan Chase & Co. and Morgan Stanley managed the bond transaction. JPMorgan declined to comment, while those for Morgan Stanley, BlackRock and Meta didn’t immediately respond to requests for comment.
The syndication of the bond took almost a week, and pricing didn’t budge from initial discussions — both fairly rare for investment-grade bonds, which are typically announced and priced the same day.
The final spread of 2.875 percentage points more than US government debt is the widest for a bond rated A or higher in the past three years, JPMorgan Chase & Co. strategists wrote in a note.
The Sopaipilla deal, named after a fried pastry popular in southwestern US, resembles a project finance loan with a structure that allows Meta to raise the money off-balance sheet to help address concerns about excess borrowing.
Some investors were able to get comfortable with the risk because the social media giant backs the debt through the data-center leases. Those leases have a four-year initial term with four options to extend, providing Meta with long-term flexibility over a potential 20-year term, according to a statement.
The deal includes a special protection for debt investors called a residual value guarantee, or RVG. Meta pioneered the use of the RVG in data center construction in its Beignet deal last year, and it means the tech company has agreed to make up a shortfall between the fair value of the data center and a pre-agreed threshold in certain situations.
This “mitigates the risks of lease nonrenewal or lease termination,” according to a recent S&P report.
The Texas facility will go online in 2028 with Meta as the initial sole tenant. BlackRock funds will hold an 80% interest in the joint venture, while Meta will retain the remaining 20%.
The bond sale was increased by about $273 million when it launched, and the spreads tightened to 2.67 percentage points more than Treasuries on Tuesday, according to Trace pricing data, as the relatively high yields drew more buyers.
That contrasts to recent AI bond flops which have sold off after pricing, including those from SpaceX that has left some investors with paper losses.
