Meta is facing higher borrowing costs as it prepares to raise $12 billion through bonds linked to a new data centre project in El Paso, Texas. The financing, structured via a special-purpose vehicle (SPV) owned largely by BlackRock, is expected to offer yields exceeding 7.5 percent, reflecting elevated market concerns around artificial intelligence (AI) investments.

The bonds, anticipated to price imminently, signal a roughly 0.4 percentage point increase in borrowing costs compared with Meta’s previous major data centre deal nine months ago. In October, Meta raised $27 billion in a record-setting corporate bond sale for its “Hyperion” data centre in Louisiana. That spread adjustment underscores investor caution amid a broader pullback in AI-associated stocks and growing scrutiny of tech firms’ expansive debt issuance.

The El Paso project involves nearly one gigawatt of data centre capacity and will be financed through the SPV Sopaipilla Investor, which will hold an 80 percent stake, with Meta retaining the remaining 20 percent. This structure mirrors the earlier Louisiana deal, which was funded via the Beignet Investor SPV. Both vehicles are named after regional culinary specialties and allow Meta to isolate the project’s finances, thereby keeping its corporate balance sheet comparatively unaffected.

The bonds, maturing in 2048, are secured against Meta’s commitment to 20 years of rent payments starting in 2028. The lease includes four renewal options at four-year intervals, and an early termination would trigger substantial fees, offering lenders additional protection. Meta also assumes construction-related risks by covering any cost overruns above 105 percent of the initial budget.

Credit rating agency S&P assigned the new debt an A+ rating, one notch below Meta’s corporate rating of AA-. Analysts note that such project-level financing has grown popular among technology firms aiming to raise capital without increasing direct corporate indebtedness. This trend parallels recent large-scale borrowings by other AI-focused companies, such as Anthropic’s $35 billion financing secured against leased computer equipment and a guarantee from Broadcom.

JPMorgan and Morgan Stanley, co-lead bookrunners for the transaction, along with BlackRock and Meta, declined to comment on the deal. The pricing and issuance of this deal will be closely watched as investors reassess risk premiums amid shifting sentiment toward AI-driven ventures and tech infrastructure investments.