If I understand the explanations on HN, the complaint is that Meta is taking on debt, which would normally affect its credit rating, so they're "hiding" the debt in a LLC without materially changing anything. Thus, alleging that Meta is "faking" a higher credit rating than it should have.

However, it looks like this construct might actually protect Meta against the main two risks that might make the datacenter be unprofitable (force majeure like a disaster destroying it, or a collapse of datacenter demand), i.e. keeping the good credit rating may be justified because the construct is actually very different, protecting Meta from risk, even though the article suggests that it's just a fig leaf?

I've seen at least two different commercials each focused entirely on the personal story of a relatable, folksy person living in a small town in a fly-over U.S. state, talking about how the town was declining and times were hard - then Meta built a new data center nearby and this person along with many others got jobs there and now things are great. They are very well-produced with cinematic shots of rustic small-town main streets, dusty pickup trucks in rural settings and local high school football games. Aside from the obvious brand-washing, it would be extra on-brand if it turns out Meta doesn't even own the data center but still tries to take credit for it.

> The bonds for the Hyperion data center priced with a coupon of almost 6.6%, roughly a percentage point higher than Meta’s outstanding corporate bonds and in line with the average junk bond. That’s a higher yield than investors would expect given that S&P rated the Hyperion bonds A+, safely within the investment-grade spectrum.

Apparently the bond market is pricing the guarantees made by Meta to this other entity as not quite as good as bonds that Meta issues itself, and Meta is willing to pay the higher interest rate. So, not entirely a free lunch?

I guess sometimes a company wants to issue junk bonds and its rating gets in the way.

Wasn't that the root of the 2008 crash? The debt spiral was acceptable because people were making enough money in the present that regulators were powerless to advise against it. In a sane world people often go to jail for decades when doing this at pennies on the dollar.

> (…) this is functionally Meta borrowing $27.30 billion for a campus no one else will touch, packaged in legal formality precise enough to satisfy the letter of consolidation rules and absurd enough to insult the spirit.

> The structure maintains a precarious technical separation that, under current interpretations of accounting guidance, allows Meta to keep roughly $27 billion of assets and debt off its own balance sheet while continuing to provide every meaningful form of economic support.

Downstream of the capex to build the data centre is, presumably, a sister capex to build a power station. At what stage do these come hand in hand? Or does this financing include provisions to pay the electricity bills for the next ten years which, in turn, gets used by the power company to finance the construction of a new power plant? The power company gets some kind of heads up?

If I finance the construction of a mile long dinner table due for late November 2026, presumably some of that had to trickle down into a local turkey farm, lest everyone go hungry?

If this becomes the default template for AI capex, headline leverage stats for most of big tech are going to drift further and further away from their real balance sheets

[0] https://en.wikipedia.org/wiki/Credit_default_swap

(Clarification: I used a diabrowser.com feature to clarify the article, which uses ChatGPT underneath)

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Meta wants to build a huge AI data center campus in Louisiana. It costs about $28–29 billion. Instead of just borrowing the money itself and putting the debt on its own balance sheet, Meta uses a maze of LLCs and contracts to:

- Get $27.3 billion of debt raised by a special company called Beignet Investor LLC (80% owner of the project).

- Keep that debt off Meta’s official balance sheet, even though:

▫ Meta designs the campus,

▫ pays for overruns,

▫ pays the rent,

▫ guarantees the value at the end,

▫ and will basically be the only user.

In real life, this is basically Meta borrowing to build its own data center. On paper, it’s “someone else’s” debt.

Why is this off-balance-sheet?

The accounting rules say you only have to put an entity on your balance sheet if you “control” it and take on most of the risk/benefit.

Meta’s position is: “We don’t control this JV company, even though we do all the important things and take on all the risk.”

The rating agency in the piece is mocking this. They list all the ways Meta obviously controls and supports the project, then say: under current accounting rules, if Meta insists it doesn’t control it, we all politely pretend that’s true. So the $27B debt doesn’t show up on Meta’s balance sheet, even though economically it’s Meta’s problem.

As has been mentioned though if you purely want the info there are more succinct articles out there, e.g.: https://www.forbes.com/sites/petercohan/2025/11/25/metas-ai-...