Meta Lands Record $29B AI Data Center Deal -- Private Credit's Biggest Bet Yet

Private credit's biggest names have been waiting for an opening like this and Meta Platforms Inc. (NASDAQ:META) just handed them one. This week, Pacific Investment Management Co. and Blue Owl Capital Inc. secured a $29 billion financing package for Meta's new AI-focused data center in Louisiana, a rare move into the investment-grade debt arena typically owned by Wall Street banks. Pimco is arranging $26 billion in debt, Blue Owl is committing $3 billion in equity, and Morgan Stanley is advising on the structure, which is expected to be backed by the data center's assets. It's the largest single-project AI data center financing to date, potentially setting a new precedent for private credit's role in big-ticket infrastructure.

The timing reflects an accelerating AI build-out across the U.S. Elon Musk's xAI Corp. has told investors it aims to spend $18 billion on data centers, while Amazon.com Inc. and OpenAI Inc. are pursuing their own large-scale sites. Morgan Stanley estimates capital expenditures tied to AI could surpass $3 trillion in the next three years. Securing Meta's deal was highly competitive Apollo Global Management Inc. and KKR & Co. reached the final round, with Brookfield Asset Management Ltd., Blackstone Inc., and Ares Management Corp. also vying for the mandate. By scale, Meta's project stands well above other recent AI infrastructure financings, most of which have been under $10 billion.

For private credit, this could be the start of a deeper move into investment-grade opportunities, a market Apollo sees as potentially reaching $40 trillion. With corporate M&A slowing, the sector is looking to deploy an estimated $450 billion in available capital into new asset classes. Blue Owl CEO Marc Lipschultz has compared the AI push to a modern Gold Rush only here, the picks and shovels are the funding structures behind the data centers. If Meta's deal proves successful, it could become a template for large-scale, asset-backed financing that bypasses the traditional bank syndication model.

This article first appeared on GuruFocus.