Pimco Rakes In $2B Windfall on Meta’s Data Center Debt

Pimco is already reaping big rewards from its role in financing Meta Platforms’ massive data center in Louisiana.

The company has racked up roughly $2 billion in paper profits on a $27 billion debt package backing the tech firm’s Hyperion data, Bloomberg reported. The Newport Beach-based manager led the debt financing, which priced at par just last week and has since jumped above 110 cents on the dollar, according to Trace data.

Pimco reportedly held about $18 billion of the debt when it priced and has already sold more than $1 billion into the secondary market, locking in early profits for its client funds.

Citadel Securities helped make a market for the offering, using its own balance sheet to facilitate trades as large as $500 million. The Ken Griffin-led market maker expanded into investment-grade credit last year, aiming to chip away at banks’ dominance in the space.

The Meta deal captivated debt investors eager to park capital behind the physical buildout powering artificial intelligence. Structured through a special-purpose vehicle, the financing allows Meta to raise cash off its balance sheet.

Blue Owl Capital will co-own the Richland Parish data facility, with Meta keeping a 20 percent stake in the project. Morgan Stanley arranged the debt along with $2.5 billion in equity.

The securities, rated A+ by S&P Global Ratings, also came with an unusual backstop that protects lenders if Meta doesn’t renew its lease, a feature that could set a precedent for data-center financing as AI-related infrastructure spending explodes.

Funds managed by BlackRock, including several iShares ETFs, are also among the major holders.

The $10 billion, 4-million-square-foot data center will supply Meta’s AI lab with five gigawatts of computational power and is expected to be large enough to cover most of Manhattan.

Hyperion is expected to be ready to provide a portion of its eventual computational power by 2030.— Holden Walter-Warner