BlackRock Among Biggest Investors in Meta’s Giant Data-Center Debt Deal
Meta and Blue Owl, the private-credit firm, raised $27 billion to finance the buildout of a Louisiana data center
BlackRock BLK -2.59%decrease; red down pointing triangle was among the biggest investors in the $27 billion private-debt deal backing construction of Meta Platforms’ META 0.15%increase; green up pointing triangle data center in Louisiana, highlighting the scale of the artificial-intelligence buildout and its insatiable demand for capital.
BlackRock bought more than $3 billion of bonds issued last week to finance the data center, which is called Hyperion, according to people familiar with the matter. The project is 80%-owned by private-credit manager Blue Owl Capital OWL 2.22%increase; green up pointing triangle, while Facebook parent Meta owns the remaining 20% stake, according to S&P Global Ratings. The bond sale was arranged by Morgan Stanley.
The deal stood out for its size—the largest private-debt offering ever—and for the investment grade it was assigned by S&P. The credit-ratings firm gave the bonds an A+, recognizing Meta’s role in backing for the project. But the debt yielded 6.58% at issue, a level more common in junk bonds.
BlackRock is the world’s largest asset manager in part because of its postcrisis bet that ETFs, which trade on exchanges like a stock and have certain tax advantages, would supplant mutual funds as the investment vehicle of choice for deep-pocketed and individual investors alike. It was the right call; BlackRock’s iShares funds alone manage more than $5 trillion in assets.
A slice of BlackRock’s bond purchases went to its ETFs. An active high-yield ETF bought Hyperion bonds last week valued at $2.1 million by Monday, making it the fund’s largest investment by far, according to fund disclosures. A BlackRock total-return ETF holds about $1.2 million of the debt and a loan ETF owns about $651,000.
Pimco, the giant bond manager, was the biggest buyer, accounting for $18 billion, people familiar with the matter said. The bonds were priced at face value of 100 cents on the dollar last week. By Monday, BlackRock’s funds had valued them at 110.2 cents, implying large paper gains for investors that initially participated in the transaction.
By issuing the debt through its venture with Blue Owl, Meta was able to finance the deal off of its balance sheet, people familiar with the transaction said. Intel used a similar off-balance-sheet arrangement last year with Apollo Global Management to finance an $11 billion chip factory in Ireland.