Lenders are demanding higher yields as big tech's borrowing creates fatigue in debt markets
A 1-gigawatt data center campus rising in El Paso, Texas, puts a dollar figure on what it now costs to build AI infrastructure at scale: $14 billion, most of it borrowed.
Meta and BlackRock announced the joint venture last week, with BlackRock acquiring an 80% stake in the campus. Of the $14 billion total commitment, $12.5 billion is financed through debt. Meta will lease the facility back rather than own it, keeping the exposure off its balance sheet.
The structure responds to a specific market condition. Lenders financing the AI data center boom are demanding higher yields, and a borrowing binge across big tech is producing debt investor fatigue, the Wall Street Journal reported. The El Paso deal shows how that pressure is changing the terms on which infrastructure gets built.
Off-balance-sheet, but not off the hook
The lease arrangement lets Meta deploy a gigawatt of compute capacity without carrying the full capital cost as a liability. BlackRock absorbs the ownership exposure and the financing risk that comes with an 80% stake in a $14 billion asset.
That trade-off has a cost. By ceding majority ownership, Meta surrenders the long-term asset value of the campus for near-term capital flexibility. Whether that favors Meta depends on how AI infrastructure valuations hold over the decade-scale lifespan of a data center.
The $12.5 billion of debt against a $14 billion total leaves a thin equity cushion at the project level. That ratio reflects how aggressively the market is leveraging these assets, and it explains why lenders are beginning to push back on yields.
What rising yields mean for the buildout
Debt investor fatigue is a gradual repricing, not a sudden stop. Lenders still want exposure to AI infrastructure. They are charging more for it.
For the largest players, that repricing is manageable. Meta can structure around it, as the El Paso deal demonstrates. Smaller developers without a BlackRock partnership or a Meta lease guarantee backstopping the debt face a more constraining market.
The cost of AI infrastructure now depends on more than hardware prices or energy contracts. Capital markets have become a major variable, and that variable is moving in one direction.
The El Paso campus is expected to reach 1 gigawatt of capacity, making it one of the largest AI data center projects in the United States. Its financing terms, and how lenders respond to the next comparable deal, will serve as a benchmark for whether the repricing trend continues or stabilizes.
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