On Tuesday, Meta Platforms and BlackRock, the world’s largest asset manager, jointly announced that they will co-develop and operate a data center campus in El Paso, Texas, with an estimated total project development cost of approximately $14 billion.
Zhitong Finance APP learned that on Tuesday,$Meta Platforms (META.US)$and the world's largest asset management firm$Blackrock (BLK.US)$jointly announced that the two parties will co-develop and operate a data center campus in El Paso, Texas, with an estimated total project development cost of approximately $14 billion. Recently, BlackRock has completed pricing for a $12.5 billion bond specifically tailored for this data center, marking the near-finalization of financing for this major AI infrastructure project.
According to disclosures from both parties, funds managed by BlackRock will hold an 80% equity stake in the joint venture, while Meta will retain the remaining 20%. To align with this equity structure, Meta will receive an additional cash distribution of USD 1 billion.
In terms of asset and capital contributions, Meta will contribute land and construction-in-progress assets valued at approximately USD 2.3 billion, while BlackRock will provide approximately USD 4.9 billion in cash. A significant portion of BlackRock’s investment will be financed through debt issuance by a special-purpose vehicle—specifically, the recently completed USD 12.5 billion debt offering. Morgan Stanley and JPMorgan served as Meta’s financial advisors for this transaction and also acted as joint lead underwriters for BlackRock’s aforementioned bond issuance.
Details of the USD 12.5 Billion “Sopaipilla” Bond Offering
The bonds were issued by BlackRock-affiliated entity “Sopaipilla Investor” (named after a fried pastry common in the Southwestern United States, continuing the naming convention established by Meta’s earlier “Beignet” bonds for its Louisiana data center project). The bonds mature in 2048 and were ultimately priced at a spread of 287.5 basis points over comparable U.S. Treasury yields—consistent with initial market guidance but unusually failing to achieve any tightening of the offering yield, which is rare for investment-grade bonds.
Sources familiar with the matter revealed that the final size of the bond issuance exceeded initial expectations by approximately USD 273 million, and prices rose slightly during early secondary market trading on Monday, indicating a modest recovery in investor demand following an initially tepid response.
However, in terms of subscription levels, the offering attracted around USD 20 billion in orders—only 1.6 times the issuance amount—far below the multiple-fold oversubscription typically sought by borrowers. This reflects a noticeable cooling in market enthusiasm for large-scale AI infrastructure financing compared to earlier periods. By comparison, the “Beignet” bonds issued in October last year to finance Meta’s Louisiana data center now trade at a yield spread narrower than the issuance spread of the current “Sopaipilla” bonds.
Structurally, this bond issuance closely resembles a project finance loan: it was issued by a special-purpose company, features amortizing principal repayments, and relies entirely on Meta’s long-term lease commitment for the data center as its source of repayment. This off-balance-sheet financing arrangement allows Meta to avoid directly consolidating substantial debt onto its balance sheet—alleviating investor concerns about excessive leverage—while simultaneously providing investors relative comfort regarding underlying risk, given Meta’s implicit credit backing.
1 Gigawatt of Computing Power and a USD 600 Billion AI Vision
Located near the Texas–New Mexico border, the El Paso data center campus has already commenced construction. Designed with a computing capacity of up to 1 gigawatt, it is dedicated to supporting Meta’s AI computing demands and core operations, with commercial operations expected to begin in 2028.
Meta previously disclosed that the project represents an investment exceeding $10 billion and is one of 28 data centers the company currently operates or is constructing across the United States.
According to Meta’s previously announced plans, the company intends to invest up to $600 billion cumulatively in data centers by 2028 to accelerate the development of technologies related to 'Personal Superintelligence,' with the aim of creating new revenue streams from Meta AI applications, image-to-video advertising tools, and smart glasses.
In addition to El Paso, the company is simultaneously constructing several gigawatt-scale data centers in rural Louisiana and other locations. The Louisiana project alone has a long-term capacity target of 5 gigawatts, with total investment expected to surpass $50 billion.
Market sentiment remains delicate, with earnings results imminent.
However, behind the race among tech giants to secure leadership in AI, Wall Street’s scrutiny is growing increasingly cautious. Meta’s stock has declined approximately 10% year-to-date, pressured by surging capital expenditures driven by large-scale AI investments.
Although this $12.5 billion debt financing was structured to minimize financial impact, market skepticism remains pronounced—investors are not only grappling with the sheer volume of massive bond issuances but are also closely watching whether these colossal data center investments will ultimately generate meaningful returns.
Meta is scheduled to release its second-quarter earnings after U.S. market hours on July 29 (Eastern Time). Further details and guidance regarding AI-related investments and returns are expected to serve as a critical test of market confidence.
Editor/Deng