Private credit firms secure a $29 billion financing deal for Meta Platforms Inc.’s data center in Louisiana, led by Pimco and Blue Owl Capital Inc. This move signals private credit’s entry into investment-grade debt markets and the growing demand for AI infrastructure funding among tech giants like Meta and xAI Corp.

Major technology companies, including Amazon and OpenAI, are in an AI arms race, with Elon Musk’s xAI Corp. planning to spend $18 billion on data centers. Morgan Stanley estimates AI capital expenditures could exceed $3 trillion in the next three years, driving the need for significant financing packages like Meta’s.

Pimco leads a $26 billion debt issuance for Meta, with Blue Owl providing $3 billion in equity. The financing structure may involve investment-grade bonds backed by the data center’s assets. Private credit firms, including Apollo and KKR, engaged in a competitive bidding war for the deal, highlighting the high demand for investment-grade debt opportunities.

Meta’s $29 billion financing package is the largest related to a specific AI data center, far surpassing other deals in the sector. Private credit firms, with $450 billion of dry powder, are eager for opportunities in investment-grade debt to expand their market share and compete with traditional banks in structuring and providing debt.

Private credit firms aim to become rivals to Wall Street banks by expanding into investment-grade deals, potentially growing the market to $40 trillion. Blue Owl CEO Marc Lipschultz likens the AI infrastructure rush to the Gold Rush, highlighting the firm’s role in financing data centers for the booming technology sector.

Read more at Yahoo Finance: Meta’s $29 Billion Deal Marks Key Moment for Private Credit