AI Meta Disguise $30 Billion in Debt, Blackstone Refinances $3.46 Billion in Debt with Securities
In a debt disguise scheme by AI big tech companies, Meta is disguising $30 billion in debt as a special purpose vehicle (SPC) and issuing $3.46 billion in commercial mortgage-backed securities (CMBCs) to refinance AI debt held by Blackstone, a private equity fund wholly invested in the massive QCT data center.
The issuance of "debt refinancing CMBCs," a hotbed of the financial crisis, and derivatives techniques that transfer debt to SPCs and create financial statements, have been secretly implemented by AI companies, some of which were spearheaded by large US private equity firms, are beginning to be revealed.
The New York Times reported on the 8th about the debt refinancing ‘securities offering,’ saying, “QTS Data Centers, a digital infrastructure company wholly owned by investment giant Blackstone, which is trying to catch up with the AI boom, has been investing billions of dollars to expand its network of cutting-edge computing facilities.” “Like a growing number of its peers, it has looked for ways to unlock additional cash, namely exotic financial instruments, and according to an investor offering sheet obtained by the NYT,
Blackstone is close to closing on a $3.46 billion commercial mortgage-backed securities (CMBS) offering to refinance the debt held by QTS, the largest player in the AI infrastructure market.”
The New York Times reported, "This is the largest transaction of its kind this year in a rapidly accelerating market.
The bonds are backed by 10 data centers in six markets (including Atlanta, Dallas, and Norfolk, Virginia), which together consume enough energy to power Burlington, Virginia, for 50 years." Blackstone's proposal is part of a recent push to finance AI infrastructure.
A McKinsey study found that $7 trillion in data center investment will be needed by 2030 to meet projected demand, and that Google, Meta, Microsoft, and Amazon have collectively spent $112 billion in capital in the past three months alone."
Blackrock, the largest private equity firm in the United States, has become the largest shareholder of Samsung Electronics and SK, excluding its holdings in the companies, in collaboration with the Lee Jae-myung administration, as part of its strategy to "make Korea the AI capital of Asia." Blackstone, the second-largest private equity firm, has announced the issuance of "debt refinancing securities" for its AI data center investments.
Big tech companies are seeking new sources of funding. Meta, Microsoft, Amazon, and Google previously relied on their own cash flow to invest in data centers, but have recently shifted to lending and have now expanded their reach by diversifying from debt refinancing to collateralized bond obligations (CMBCs), a derivative product created by slicing and dicing debt.
AI companies, in particular, are repackaging much of their debt into asset-backed securities (ABS) to diversify their debt.
The media is reenacting the financial crisis's derivatives crisis by "sanitizing" it ahead of time with massive publicity spending.
CMBCs and ABCs contributed to the financial crisis, and Korean officials and banks, unfamiliar with the complex chemical processes of derivatives, transferred most of their assets to American investment banks, while conglomerates reaped the benefits of the repackaging.
The New York Times reported that "about $13.3 billion in ABS backed by data centers has been issued in 27 deals this year, a 55% increase from 2024."
According to Sarah McDonald, senior vice president of the capital solutions group at Goldman Sachs, investors have two options when purchasing data center ABS. “You can invest in data centers with a single tenant, like hyperscalers, or in colocation data centers with thousands of smaller tenants who lease part of the data center space, power, and infrastructure,” McDonald told the Times.
“The former are investment-grade tenants with long-term leases, but the risk is very concentrated. The latter are likely to be leased to non-investment-grade tenants through short-term leases, but the investment is very diverse.”
The New York Times reported, “After Meta unveiled its aggressive capital spending plan last week, its stock price plunged 11%, and tech stocks sold off this week on concerns about overvaluation.” “Now, tech giants are turning to financing strategies that could increase their risk. To secure the capital they need, hyperscalers have tapped an increasingly complex array of debt financing options, including corporate debt, securitization markets, private finance, and off-balance sheet instruments. This shift is fueling speculation that AI investment is turning into a game of musical chairs with financial instruments reminiscent of the 2008 financial crisis.”
Blackstone’s $3.46 billion CMBS offering may seem small compared to other debt-backed deals, such as Meta’s $30 billion initial public offering to finance a data center in Louisiana, but it represents an unprecedented event in a CMBS market where only $3 billion in data center-supporting transactions were issued in 2024.
"They know how much cash they need, so they're making the CMBS market comfortable with these types of assets," said Dan McNamara, founder and chief investment officer of Polpo Capital, a hedge fund focused on CMBS. "Most traders in the market are familiar with assets like office space or industrial buildings with data centers," he said. "It's not traditional 'bricks and mortar' commercial real estate," he said of AI companies.
Further complicating matters is the growing share of derivatives, single-asset, single-borrower securities (SASBs), where all the assets in the bonds being sold originate from the same company or a single data center.
According to Goldman Sachs, 13% of all SASB transactions originate from data centers. “It’s one company, and these assets are very similar, but if there’s a problem with an AI data center, like today’s chips becoming obsolete in five years, you could lose a lot of money on these deals,” Goldman Sachs Vice President McManara told the Times. “That’s the knock on SASB. When things go bad, they go really bad.”
The Times continued, “A financial tool popular before the financial crisis also comes into play: a special purpose vehicle (SPV), which allows a company to take on a lot of debt without having to carry it on its own balance sheet.”
“When Meta structured a $30 billion debt offering for its new data center in Louisiana—the largest private capital transaction ever—the investment bank Morgan Stanley placed the debt in one of these bespoke off-balance sheet vehicles,” the Times said. “The SPV was created to provide services to Meta, but the debt technically belongs to the SPV, not Meta, so Meta looks healthier on paper.” This "SPV debt maneuver" has made it easier for Meta to raise an additional $30 billion in more traditional corporate bond markets.
According to Morgan Stanley, financing data centers overall will require $800 billion in private credit over the next two years, and SPVs are now becoming a more popular way for AI companies to structure it.
The New York Times reported, "Following Meta's lead, Elon Musk's xAI is also using SPVs to potentially raise $20 billion in debt to purchase Nvidia chips and then lease them to xAI," raising the question, "Are murky financial instruments spreading the risks of the AI spending frenzy?"
Regarding the profits of AI big tech companies, the New York Times noted, "According to Menlo Ventures, only '3% of consumers' pay for AI-related services, which amount to about $12 billion annually. If hyperscalers fail to generate sufficient profits to offset the costs associated with capital expenditures, systemic risks could enter the credit markets." The Bank of England, the UK's central bank, warned in an October report that risks will continue to increase as companies continue to shift from using their own cash flow to accumulating debt for data centers. The report stated, "This is a rapidly evolving topic, and the future is highly uncertain."
On CBS Radio on the 4th, Kwon Dae-young, Vice Chairman of the Financial Services Commission, commented on "debt investment," which involves borrowing money to invest in stocks, saying, "We've only seen it as a negative thing, but it's actually a form of leverage." When asked about the potential for a 5,000-point rise, he said, "Of course it's possible. It will lead to a strong upward trend in the Korean stock index."
Kim Dong-won, a researcher at KB Securities, said, "The target for KOSPI next year is 5,000," and added, "This year's bull market is the first bull market in 40 years since 1985 due to the expansion of valuations following the boom of the three lows (low inflation, low interest rates, and low exchange rates) and the start of the KOSPI performance cycle."
He also announced on the 8th, "In a long-term bull market scenario, the KOSPI could rise to 7,500, although it could be revised depending on changes in future performance outlook."
Park Ki-ryang, a researcher at Samsung Securities, said on the 8th that "Nvidia's earnings announcement (November 19th), the lifting of the US federal government shutdown, and the possibility of a US interest rate cut in December" were catalysts for the stock market rebound.
He added, "While the domestic stock market has recently risen significantly, this rise is driven by expectations of earnings growth. Furthermore, valuations remain undervalued compared to other global markets, and investor deposits amount to approximately 88 trillion won, providing ample standby funds. If these three factors are resolved, a return to the bull market is possible based on solid fundamentals and liquidity."
President Lee announced the KOSPI 5000 index as part of his campaign pledge and met with Chairman Blackrock during his first speech at the UN in New York.
President Lee announced the "KOSPI 5000" as part of his campaign pledge and met with Chairman Blackrock during his first speech at the UN in New York.
Blackrock, through his advisory role to the Ministry of Strategy and Finance, controlled KB Kookmin Bank and Shinhan Financial Group, becoming the second-largest shareholder after the National Pension Service. He also holds the largest shareholder position in Samsung Electronics and SK Hynix, effectively dominating the Korean stock market. President Lee declared, "Stocks are the heart of capitalism."
Blackrock and the Lee Jae-myung administration are collaborating on stablecoin issuance and the "AI Powerhouse Fund" strategy, sharing the "AI stock market boom" and prioritizing investment in the "AI Highway" without a blueprint.
See <Lee Jae-myung: 'Exchange is Peace' Violates UN 'Recommendation Prohibition' Kim Jong-un Proposes 'Peaceful Coexistence' to US, September 24, 2024>
<Lee Jae-myung: 'North Korea, the Front Line of Conflict Between Capitalism and Socialism, Needs Ties with Trump,' September 22, 2025>