<p>Meta collaborates with private equity giant Blue Owl Capital to raise $27 billion through bond issuance for the construction of data centers. This transaction sets a record for the largest private bond issuance, highlighting the immense capital demand for AI infrastructure development.</p>
<p>On October 21, media reports indicated that BlackRock, the world's largest asset management company, subscribed to over $3 billion in bonds, becoming one of the largest investors in the project. The bonds were arranged for issuance by Morgan Stanley and received an investment-grade rating of A+ from S&amp;P Global, but the yield reached as high as 6.58%, close to junk bond levels.</p>
<p>The project, named Hyperion, is 80% owned by Blue Owl and 20% owned by Meta. Reports suggest that through the joint venture arrangement with Blue Owl, Meta was able to place this financing off its balance sheet, a structure similar to Intel's financing model with Apollo Global Management for its $11 billion chip factory in Ireland last year.</p>
<h2>The Largest Private Bond Deal in History</h2>
<p>The Hyperion data center project completed financing through the issuance of $27 billion in private bonds, setting a record for the largest single transaction in the private bond market.</p>
<p>According to reports citing informed sources, bond giant Pimco is the largest buyer, with a subscription amounting to $18 billion. BlackRock subscribed to over $3 billion, becoming the second-largest investor.</p>
<p>S&amp;P Global Ratings assigned the bonds an A+ investment-grade rating, primarily based on Meta's role as a project supporter. However, the 6.58% issuance yield is significantly higher than the conventional level for bonds with similar ratings, closer to the pricing range of high-yield bonds, reflecting investors' demand for a risk premium on data center projects.</p>
<p>The bonds were issued at a par value of $1.00 last week and were valued at $1.102 by Monday, indicating that the initial investors in the transaction have already realized substantial paper gains.</p>
<h2>BlackRock ETF Participation</h2>
<p>Some of BlackRock's bond subscriptions flowed into its ETF products. According to fund disclosure documents, an actively managed high-yield ETF purchased Hyperion bonds last week, with a holding value of $2.1 million as of Monday, making it the largest single investment in the fund.</p>
<p>Additionally, a total return ETF under BlackRock holds approximately $1.2 million in these bonds, while a loan ETF holds about $651,000.</p>
<p>After the 2008 financial crisis, BlackRock bet that ETFs would replace mutual funds as the preferred tool for institutional and individual investors, a strategy that has helped it grow into the world's largest asset management company.</p>
<p>Its iShares series alone manages over $5 trillion in assets. ETFs trade on exchanges like stocks and enjoy specific tax advantages.</p>
<h2>Off-Balance-Sheet Financing Model</h2>
<p>Reports citing informed sources indicate that by forming a joint venture with Blue Owl to issue bonds, Meta was able to arrange this financing off its balance sheet. This structure allows Meta to advance large-scale data center construction while avoiding a direct increase in its balance sheet debt burden
Last year, Intel adopted a similar model, partnering with Apollo Global Management to finance an $11 billion chip factory in Ireland.</p>
<p>Such off-balance-sheet arrangements are becoming a new option for technology companies to finance capital-intensive AI infrastructure projects, meeting huge funding needs while maintaining flexibility in financial statements</p>

META

<p>Meta partners with private equity giant Blue Owl to raise $27 billion through the issuance of private placement bonds to build data centers, setting a record for private placement bond issuance. BlackRock subscribed over $3 billion, becoming the second-largest investor; bond giant Pimco subscribed $18 billion, ranking first. The bond received a S&P A+ rating, but the yield reached 6.58%, close to junk bond levels</p>

- Meta has partnered with Blue Owl Capital to raise $27 billion through bond issuance for data center construction, setting a record for private bond issuance.  
- BlackRock has invested over $3 billion, becoming one of the largest investors, while the bonds received an A+ rating from S&P Global but offered a yield of 6.58%, indicating high risk.  
- This off-balance-sheet financing structure allows Meta to advance its data center projects without increasing its debt burden, similar to Intel's previous financing arrangement for a chip factory.

Meta partners with PE giant Blue Owl to raise $27 billion for data center construction, with BlackRock being one of the largest investors