Prospective investors in Meta’s $12 billion data centre are seeking what the Financial Times reported as “significantly higher yields” compared to terms secured just nine months ago, the latest sign of investor wariness around AI financing.
Citing people familiar with the discussion, the paper reported that bond investors for the El Paso, Texas, based data centre were demanding a risk premium of roughly 0.4 per cent compared to financing for its $27 billion Hyperion data centre last October.
The El Paso site is preparing to sell its bonds through a special-purpose vehicle owned by BlackRock and offering yields of over seven per cent, the people added. Price discussions are still in early stages and could change when the deal officially launches, which could be as soon as Monday.
A credit investor focused on investment-grade debt told the paper that in the high-grade market, an increase of even ten basis points is very significant, as it can lead to tens of millions of additional interest expense a year.
The news follows a cooling of investor appetite for AI-related deals after a series of large raises by tech companies in recent months. On 8 July, Amazon raised $25 billion through a multi-tranche bond sale to increase investment in AI infrastructure, less than six months after a $37 billion raise in March.
Growing fears over the long-term prospects of AI companies to deliver a return on investment have also led to selloffs in stock markets around the world. South Korea’s Kospi fell over 20 per cent in early July after AI shares in chipmaking giants Samsung and SK Hynix dropped over five per cent each, while the US’s tech-heavy Nasdaq has been in a slump for over a month.
