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\t\tMusk\u2019s Starlink broadband service is also moving to strengthen UK connectivity\t<\/p>\n\t\t\tThursday 19 February 2026 1:52 pm
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\t\t\tThursday 19 February 2026 1:53 pm\n\t<\/p>\n
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\t\tMusk\u2019s Starlink broadband service is also moving to strengthen UK connectivity\t<\/p>\n
Meta is paying roughly $6.5bn (\u00a34.82bn) in extra financing costs to keep $27bn of AI infrastructure borrowing off its balance sheet, a costly accounting choice that captures the mood in Big Tech\u2019s race to build the pipes of AI without spooking investors.<\/p>\n
The arrangement, known as special purpose vehicle financing (SPV), allows an external entity to raise debt, construct the data centre, and lease it back to the tech group.<\/p>\n
On paper, Meta books lease payments rather than traditional borrowing, but really, it has committed to decades of payments tied to huge computing facilities.<\/p>\n
The structure was used for Meta\u2019s $30bn data centre project in Louisiana, which was financed largely through private credit heavyweights like Blue Owl Capital, Pimco, BlackRock and Apollo.<\/p>\n
Meta owns around 20 per cent of the vehicle and has offered a residual value guarantee, meaning it could be required to compensate investors if the project\u2019s value falls below agreed levels at the end of the lease.<\/p>\n
Oracle, too, has pushed tens of billions of dollars of AI data centre investments in similar ways, including a $38bn package tied to its partnership with OpenAI.<\/p>\n
Elon Musk\u2019s xAI has raised $20bn via a comparable structure, with debt secured against Nvidia chips.<\/p>\n
And in some cases, Nvidia has even invested equity in customers that then use it to buy its hardware, a circular flow of capital that keeps revenue ticking while the chip giant\u2019s liabilities sit elsewhere.<\/p>\n
The accounting is legal and disclosed, but it is unfolding against a backdrop of eye-watering AI forecasts and a surge in borrowing across the sector.<\/p>\n
Morgan Stanley estimates hyperscalers could raise $400bn in corporate bonds in 2026 alone to fund AI expansion.<\/p>\n
JPMorgan has calculated that AI and data centre firms now account for 14.5 per cent of its $10tn investment-grade bond index, which is about $1.5tn in debt exposure.<\/p>\n
UBS says roughly $450bn has flowed from private capital into tech infrastructure as of early 2025.<\/p>\n
For market watchers, that scale and complexity are stirring memories of past tech bubbles.<\/p>\n
AJ Bell\u2019s Russ Mould points to Richard Bookstaber\u2019s study of past market crises. \u201cHe argued that leverage, complexity and opacity help to fuel bubbles,\u201d he told City AM.<\/p>\n
\u201cThe use of special purpose vehicles and off-balance sheet structures to fund enormous AI capital investment will bring back bad memories for experienced investors.\u201d<\/p>\n
\t\t\t\t\tRead more<\/p>\n