The artificial-intelligence buildout keeps getting bigger and bigger.

On Tuesday, Meta Platforms Inc. announced a joint-venture partnership with alternative-asset manager Blue Owl Capital Inc. for the purposes of building and managing the Big Tech giant’s Hyperion data-center campus in Louisiana.

The $27 billion deal marks the largest private-credit transaction ever. Funds managed by Blue Owl will own an 80% interest in the joint venture, while Meta will hold the remaining 20% stake. Blue Owl will fund part of its capital through debt issued to Pimco and other bond investors via a private securities offering. Morgan Stanley served as the exclusive financial adviser to Meta.

To form the joint venture, Meta contributed its existing Hyperion data-center land and construction assets, which the company previously held on its books as assets intended for sale. In exchange for its 80% stake, Blue Owl injected approximately $7 billion in immediate cash into the new entity. The structure allowed Meta to receive a $3 billion cash distribution from the venture upon closing.

BlackRock Inc.’s exchange-traded funds made a big investment in Meta’s debt associated with the deal, the Wall Street Journal reported.

The record-breaking deal is a sign that hyperscalers — the Big Tech companies building out AI infrastructure —are turning to new ways of raising capital to fund their ambitious AI plans. Up until this point, hyperscalers have primarily been paying for their data-center developments up front, a move that reduced their free cash flow.

“Our partnership with Blue Owl Capital to develop the Hyperion Data Center is a bold step forward — combining Meta’s deep expertise in building and operating world-class data centers with Blue Owl’s strength in infrastructure investment,” Meta Chief Financial Officer Susan Li said in a press release Tuesday.

Private-credit arrangements offer hyperscalers a faster and more flexible, albeit more expensive, financing option than traditional debt instruments.

While S&P Global Ratings assigned the bonds an investment-grade rating of A+, the debt yielded 6.58% at issue — a rate typically associated with high-yield issuances.

By utilizing a joint-venture structure, Meta can secure funding for the project off its own balance sheet, Bloomberg reported. Upon completion of the data center, Meta will use the facilities through operating lease agreements with the joint venture, which have a four-year initial term with options to extend.

The terms of the deal also offer investors a sweetener: Meta provided the joint venture with a guarantee that the property will maintain a certain minimum value for the first 16 years. If Meta decides to terminate the lease and the market value of the data center is less than the guaranteed amount, Meta must write a check to the joint venture to cover the loss.

This type of asset-based financing, where a financial security is collateralized by a pool of assets — in this case, the future lease payments from Meta — has become an increasingly popular way to fund data-center buildouts, Jeffery Foster, finance professor at Georgetown, told MarketWatch prior to the deal’s announcement.

For Blue Owl, the data center acts as the collateral and the primary revenue generator through lease payments, while Meta gains access to the finished facility without having to fund its entire $27 billion construction up front.

BlackRock did not immediately respond to a request for comment.