BlackRock issues $12.55 billion Meta data center bond with a 7.534% yield

Huoxing Finance reports that on July 28, according to Bloomberg, investment-grade bonds issued by BlackRock for Meta’s data center project in El Paso, Texas, rose in early Monday trading. The bonds were issued with a yield of 7.534%, 287.5 basis points above U.S. Treasuries—a level more typical of the junk bond market. During the issuance, subscription demand totaled approximately $20 billion, just 1.6 times the offering amount, significantly below this year’s average subscription multiple of about 4 times. However, the higher yield ultimately attracted investors, causing the bond’s secondary market yield spread to narrow to around 260 basis points above U.S. Treasuries, below the original spread of 287.5 basis points. Recent large-scale bond financings by tech companies have strained investor capacity to absorb additional AI-related debt. Tech bonds previously experienced selling pressure, and continued capital expenditure expansion by companies like Alphabet, along with potential further issuances, have further weakened demand for newly issued bonds. The early performance of BlackRock’s recent bond issuance contrasts with recent offerings by companies like SpaceX. After SpaceX completed its first investment-grade bond issuance in June, its bonds declined in the secondary market, leaving investors with significant paper losses.