Meta Platforms secured $26 billion in debt funding for a new data center in Louisiana, offering a special guarantee on the facility. The joint venture will own the 4-million-square-foot Hyperion complex, with Meta leasing it for 20 years. The company will reimburse investors if the data center’s value falls below a certain threshold, a move to encourage investment in AI infrastructure.

The financing arrangement will keep the debt off Meta’s books, allowing it to focus on AI development. Meta selected Pacific Investment Management Co. to lead the $26 billion debt financing, with Blue Owl Capital Inc. contributing $3 billion in equity. The bonds will have a 24-year tenor, including four years for construction, and are expected to receive investment-grade ratings.

Tech companies are seeking funds for AI projects, with Meta’s financing structure potentially becoming a template. The Hyperion complex is part of a wave of new data-center construction driven by AI advancements. JPMorgan estimates $150 billion in financing needs for data centers in 2026 and 2027. The planned facility will have a significant impact on the data center sector and require substantial funding.

Meta’s guarantee covers potential losses if the data center’s value decreases significantly. The financing model for data centers has evolved due to the capital-intensive nature of AI infrastructure. Before AI, data-center financing was on a smaller scale, but the rise of AI has led to the need for larger, more complex facilities. The Hyperion complex represents the future of data-center construction in the AI era.

Read more at Yahoo Finance: Meta’s Backstop Is Linchpin for $26 Billion AI Data-Center Deal