Deus / diabolus ex machina

When it comes to Friday the Thirteenth, the weekly IJ editorial has no option but to point a trembling finger at the market and put into words what a lot of you are thinking.

The tsunami of data centre investments is creating a monster… and nobody seems to know whether it’s friend or foe.

One thing for sure, there’s a heck of a lot of capital being deployed against AI capex and concerns are high that “risk is being systematically underpriced”, as one source puts it.

Putting that into context, the IJGlobal database is groaning with monstrously large transactions in an asset class that’s a fairly recent arrival to this sector.

A quick search reveals that we have the best part of $500 billion of transactions logged – and that’s just the ones that are relevant to our database. Further, the vast majority of them closed in the last 3 years.

The headline deals are:

• $30.3 billion – 2.064GW Hyperion Data Center Campus in Louisiana – October 2025
• $30 billion – Meta AI Data Center bond issuance – Oct 25
• $25 billion – Alphabet Data Centers bond issuance – Nov 25
• $21.1 billion – 1.278GW Stargate Santa Teresa Data Centers in New Mexico – Nov 25
• $18 billion – Oracle AI Data Centers bond issuance – Sept 25
• $15 billion – Amazon Data Center bond issuance – Nov 25
• $12 billion – Aligned Data Centers debt and Equity Funding, Texas – Nov 25
• $8.1 billion – 412MW Stargate Abilene Data Center 5 & 7, Texas – May 25
• $7.9 billion – CyrusOne warehouse credit facility, Texas – July 24
• $5.7 billion – 420MW QTS Cedar Rapids Data Center Campus, Iowa – Oct 25

Those are the biggest deals to have closed that we have logged in our database. They all closed in the last couple of years. They’re all in the US. And they add up to a little more than $173 billion… and there’s a lot more on the way… all over the planet.

Out of the biggest deals to have closed (the above is a select list from our database) the final quarter of 2025 saw almost $140 billion deployed… which one source described as “shocking”. Wonder what this infra veteran will say this time next year?

Outside of the US, everything that fits with our criteria to appear in our database falls towards the more humble end of the scale.

There is the additional facility of $4.4 billion for Bridge Data Centres to finance the development of hyperscale data centre campuses in high-growth markets like Malaysia and Thailand. This deal closed last March.

And then there is the Brookfield-owned Data4 debt raise and incremental capex financing from December 2024 that weighed in at €3.8 billion ($3.9bn) to refinance capex debt and cover related expenses due to reorganisation.

This year – 2026 – is surely going to be a bumper one for bond issuances from the AI infrastructure market leaders – Amazon, Meta, Google (Alphabet), Oracle and Microsoft.

Picking a random piece of research into this space – there’s been a lot – Dell'Oro Group states: “The multi-year AI expansion cycle is projected to drive worldwide data centre capex to $1.7 trillion by 2030. Hyperscale and neo cloud service providers, along with sovereign AI initiatives, are entering a new phase of infrastructure expansion.”

Baron Fung, senior research director at Dell'Oro, says: “The Top 4 US hyperscale cloud service providers – Amazon, Google, Meta and Microsoft – entered 2026 with strong momentum, raising combined data centre capital expenditures to nearly $600 billion.

“Despite increased scrutiny around AI infrastructure returns, hyperscalers continue to invest aggressively, supported by large cash reserves and a long-term focus on market share.

“This growth is being driven by the deployment of larger and more complex AI clusters, which are increasing demand for high-performance networking, storage, inference capacity, and advanced power and cooling infrastructure.”

That’s a lot of capital being deployed in a fast-moving sector, backed by sponsors with deep pockets, taking a lot of infra folk along for the ride.

Hyperion – Meta / Blue Owl

For the sake of this piece – and before hearing what infra specialists have to say on the subject – let’s take a closer look at the largest private-capital backed data centre investment to date by a hyperscale operator… Hyperion.

Background first – Blue Owl managed funds acquired an 80% stake in Hyperion with Meta retaining 20%. Meta contributes land and under-construction assets that had previously been designated for sale. This in-kind asset contribution monetised non-core holdings without disrupting Meta’s operational continuity, enabling a one-time $3 billion distribution to Meta, creating near-term liquidity while preserving long-term control over critical infrastructure.

Rather than self-funding massive campuses on its balance sheet, Meta shifted the bulk of capital risk to institutional investors while maintaining its role as the operational expert.

Blue Owl Capital provided $7 billion by issuing debt securities as part of its contribution, and Meta secured its one-time distribution of $3 billion from the joint entity.

Meta also signed operating lease agreements with the JV for the use of all campus facilities. The lease agreements have a 4-year initial term with options to extend.

The parties committed to fund their respective pro rata share of the total development costs for the buildings, power, cooling and connectivity infrastructure at the campus.

Once operational, the Hyperion campus – on 2,700 acres in Richland Parish, Louisiana – will draw twice as much power as the city of New Orleans on a peak day.

When it comes to database credit, Morgan Stanley shoots to the top of tables for having acted as sole bookrunner on the deal for a bond issuance of $27.3 billion, pricing at 225bp over US Treasuries and yielding a coupon of 6.58%.

Pacific Investment Management Company (PIMCO) was the biggest bond buyer, taking on around $18 billion, while BlackRock purchased more than $3 billion of the debt.

Interesting to note the bond runs for 24 years… but the lease agreements will have a 4-year initial term with options to extend.

However, according to a Meta press release: “To make the structure attractive to debt investors (who need predictable cash flows to service the ~$27 billion bonds maturing in 2049), Meta provided a residual value guarantee (RVG) covering the first 16 years of operations.

“If Meta chooses not to renew or terminates early within that window, it must make a capped cash payment to the JV to cover any shortfall in the campus's value (ensuring investors get expected returns).”

Well that’s a bobby dazzler of a deal and if it doesn’t win an IJ award, I’ll eat my hat.

Word on the street…

There’s a weariness when you talk to the old guard about data centres and these new-fangled projects. Some folk hanker after the days when it was all power stations and PPP motorways… things you can take to the bank!

But the world evolves and infrastructure evolves along with it. We now accept as “project finance” transactions that would have been scoffed at back when power plants were the staple for financing and offshore wind was still at concept stage.

One senior lender who is very much in favour of the new wave says: “The world is changing and this infrastructure will be as fundamentally necessary as electricity lines a hundred years ago. I think it ends well.

“LNG however… there’s a long-term fix for a short-term problem, don’t see that playing out so cleanly.”

Now that’s a good point. I have niggling fears over investments into technology as you just can’t call how it will evolve. It moves too fast and the risk of becoming obsolete should never be ignored. However, all this money piling into LNG… you know, there’s a Friday The Thirteenth next month too!

But one industry luminary makes a good point on the risk front: “Provided the investments are not debt fuelled, then the big developers, investors and tech companies can wear the risk of a bubble.”

Another with a slightly darker aspect raises concerns over “the availability of water and power to data centres” while also pointing to technology advances that impacts the “obsolescence trajectories of older data centres”.

The gloomy infra type adds: “If AI will control the world, then I’m sure they will come up with a solution. And all will end horribly for us.”

Yet another contact – this one of the equity flavour – says: “The investment is gigantic and revenues are totally dependent on new uses. AI benefit and use cases are still at an early stage. And the convoluted web of back-scratching – vendor user financing arrangements – creates a huge domino effect if one link fails to achieve growth.

“Five years back, everyone wanted to invest in Altnets. Now, everyone’s nursing losses and write offs… and it’s still unravelling. We see the same dynamics here – huge upfront investment on the back of unknown demand and revenue growth.”

One more mulls “infra banks financing chips at 100% of value and pretending they can last 5 years” adding: “Yet historically they only last 2-3 years before they need to be replaced with newer, better ones.”

This source is of the view that “it’s all a Ponzi scheme” where “Nvidia buys into X company, that company uses the cash to buy Nvidia chips at full price, yet the real value is likely much less”.  

However, the final word has to go to an old friend of an advisory leaning who goes all sotto voce: “Shhhhhhh… it’s great for advisers!”