I asked ChatGPT to make this more readable since it's a mix of satire and actual information:
(Clarification: I used a diabrowser.com feature to clarify the article, which uses ChatGPT underneath)
==============
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.
If the llc declares bankruptcy does meta have to pay the bank for it - or can they buy the assets at fire sale prices?
I have skimmed through the article and if I get the details through all the humor, satire and sarcasm even remotely correct, the major assets are actually the duality of payment obligations and residual value guarantees, both from meta. One could include cost overrun protection at the construction time too.
The "fire sale prices" would be so delicious as to guarantee that the entity(-ies) involved stay solvent as long as meta stays solvent.
My personal experience with LLC loans and banks is that the bank is using the assets as collateral and me as a backstop.
I thought the whole point of LLC was to limit liability so you wouldn't be liable for debt beyond your paid up capital? Why would you ever sign a personal guarantee?
The liability I’m shielded from is not debt I specifically requested. I’m shielded from unknown events.
banks are not stupid… you can’t just open LLC, borrow billion bucks, spend it and then be like “oops, LLC mates, not liable”
You can if you are Meta and are willing to litigate the hell out of it.
Meta doesn't actually owe the bank anything in this setup. That would be Blackrock and the other private creditors.
Mechanistically, how would the LLC achieve bankruptcy?
you just... file for bankruptcy like any other person or corporation?
Yeah but when you come to bankruptcy court with significantly more assets than debt, they aren't going to let you sell the business for pennies.
I'm asking how you would believe this vehicle would go broke, which is the usual reason to go to bankruptcy.
Corporate bankruptcy happens for a lot of reasons other than being "broke". Chapter 11 is a court-supervised way of restructuring your debt. This has a lot of utility in many situations other than not being able to pay.
A lot of comments praising this summary, but I'll criticize it: it's still too verbose, and misses the point.
Meta wants to fund this project, but doesn't want the debt on own its books (because it would impact its vanity AA credit rating). Debt investors are happy to finance a special purpose vehicle guaranteed (in a non debt way) by Meta at a credit rating almost as good as Meta's (say, A). No one is confused this is Meta getting financing for their own project; they've just put it in a wrapper for vanity credit score reasons.
So… ‘vanity’ ratings… what’s the point of them then.
Still too verbose. Here's a TL;DR.
Meta is borrowing a whole lot of money and they're lying about it to investors.
No one is lying or deceived here.
Ehh, tell me the credit ratings assigned by rating agencies to mortgage backed securities circa 2005-2007. Its an ecosystem with misaligned incentives, and some cohort of investor will be left holding the bag. Big Tech, investment banks, and ratings agencies will get off with no consequences when this Jenga-esq capital apparatus eventually collapses.
It’s not necessarily lying, but it’s certainly deceptive.
Thank you, I actually understand what this is all about now.
They can get a better interest rate by using a specialty data center lender.
This is hilarious because I was at the Louisiana public utility commission meeting where the argument was basically it’s Meta borrowing the money so they’re good for it.
Very useful, ty
"None of this is unusual except for the part where Meta designs, builds, guarantees, operates, funds the overruns, pays the rent, and does not consolidate it."
So ChatGPT put this sentence in list form and reordered it a bit. AGI is imminent!
This might be the first time an explicit ChatGPT response survived being the top comment
I personally think it’s a great response and makes it clearer what’s happening
Times are changing quickly!
One year ago was taboo to say you were using LLM to help you code, today is the other way around...
> today is the other way around...
It is definitely not taboo to say you’re writing your own code.
could get you fired in more and more places though… :)
This isn’t to code. It’s tk summarize - something LLMs are usually good at, since they’re essentially lossy text/knowledge compression at their root.
Yeah... no it's not.
This is testable:
Can you link to another one?
[dead]
Is Meta actually obligated to repay the loans or not?
That’s how you can decide if this is disingenuous or not. If Meta is obligated to repay the loan and used to synthetic means to get it off the balance sheet that’s a problem.
If they have in fact successfully transferred risk to other parties then that’s what deals like this are for. It’s the whole reason the concept of limited liability exists.
I am fully willing to believe it’s the former. But that’s the test.
I don't think Meta has a debt relationship with the loans involved here; that's the point. It does have strong contractual obligations to the wrapper business, though.
Even if they aren't obligated to repay, they have to in practice because it'll impact their ability to get loans in the future. If the shell company declares bankruptcy and gets the loans off Meta's books no one will ever loan money to Meta again.
They would still be able to get loans, but the terms would be much worse.
Basically, if we’re reading about it from substacks and Matt Levine’s newsletter then it’s already fully common knowledge in the finance world.
Eh, debt investors have short memories. They buy 100 year bonds from Argentina, for fuck's sake. It might limit Meta's ability to do this SPV trick.
LOL "The entity is named “Beignet,” presumably because “Off-Balance-Sheet Leverage Vehicle No. 5” tested poorly with focus groups."
Meta's accounting games are entirely reminiscent of Enron, who famously named their off-balance sheet debt-hiding special purpose vehicles after Star Wars "Jedi 1, Jedi 2," Jurassic Park, "Raptors 1 through 7," and the crooked CFO's kids "LJM" etc.
It’s a fitting name for Louisiana at least. But this place is next Monroe which is…nowhere near New Orleans.
This entire thing was a masterpiece I love it.
It definitely has the Voltaire/Onion like snark and cynicism with biting accuracy that really gets me going. We need more well informed rants disguised in heavy sarcasm
> This treatment is considered acceptable because the people who decide what is acceptable have accepted it.
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.
The 2008 crash was in part caused by inaccurately rating synthetic bundles of subprime mortgage debt as extremely low risk (e.g. AAA). Subprime borrowers had a much higher risk of defaulting than a AAA rating implied.
On the other hand, Meta has great creditworthiness. And guarantees this vehicle. So... it's not the same.
Isn’t part of its creditworthiness how much debt it’s carrying? And if it’s shifting that off of its balance sheet, then it appears in better shape than it actually is.
This time is different because this stuff is all tied into centralized economic planning by the orange one, and it’s unclear if we’ll continue to hold elections after he crashes the economy and declares a national state of emergency.
Does it need to be a secret to be noteworthy, especially if it’s apparently working despite not being a secret anymore?
I meant to say it's not new information. The blog post I linked is from a month ago. It is also more accessible for casual reading.
Relevant excerpts to understand what's at play here:
> (…) 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.
Monroe LA is the former headquarters of Lumen, they realized that their corporate headquarters was a white elephant and donated it to the local university I think. However that means there is available power capacity from the local power company and of course, fair amounts of fiber optic cable nearby.
Unfortunately I didn't find a mention of any mathematical geometry in the article.
It’s buried in the article but this about a debt vehicle created to finance a “2.064 GW hyperscale data center campus”. That’s approximately equivalent to a One-Third-Gorges Dam (one tenth of the Three Gorges Dam.)
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?
> 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?
Mostly things like this, yeah. The hyperscalers don't want to get into the power business.
> One-Third-Gorges Dam (one tenth of the Three Gorges Dam.)
Pedantically, that's one ninth of the Three Gorges Dam. One tenth would be the 0.3 Gorges Dam.
It seems to me that the lengthiness and opacity of the report is part of the joke, and therefore running it through ChatGPT kind of misses the point. (The "FSG analyst" would have intentionally spread a layer of BS on top of everything to make it a lot of extra work to understand that the debt should actually be on Meta's books. Of course it's satirical so it calls out its own absurdity instead of actually burying it.)
Folks in the comments here begging ChatGPT to teach them how to read
This article is poorly written. It’s so desperate to be clever and edgy that it’s hard to get the facts out of it.
ChatGPT isn’t really a solution because the source is both low quality and has questionable motives. Going to any of the other good articles on the subject that have been linked in this comment section is much better.
this is the future of human-written articles - they will obligatory be written like this as 99% of article comments on HN these days is “oh, this is AI written.” :)
It is not the reader's fault if the article is unreadable in the first place.
Not to mention that asking help to explain a text is extremely common. I can read English, but I have never read a US supreme court ruling. There are much better ways for me to understand those rulings to me as a non-lawyer.
Many SCOTUS opinions, especially the major ones, are very readable! The justices and clerks are excellent writers.
The most publicly notable cases (on things like abortion, gerrymandering, gun control, etc.) aren’t so tied down in complex precedent or laws the average person is unfamiliar with.
Although, even some of those (like, for me, issues around Native American sovereignty or maritime law) are quite readable as well.
The difficulty understanding this piece comes from lack of knowledge about finance and ratings, not from an inability to read. The blog assumes a large amount of financial knowledge which is not common among the HN audience.
It seems fairly understandable even without financial knowledge?
1. Facebook creates a shell company.
2. The shell company borrows billions of dollars, and builds a data center.
3. Facebook leases the data center.
4. The fact that it is technically only a four-year lease with only one possible tenant can conveniently be ignored, as Facebook assumes essentially all possible risks. The shell company could only possibly lose money if Facebook itself goes under, so the lenders can treat the loan as just as reliable as Facebook itself.
5. Because Facebook technically only has a four-year lease, it can pretend it doesn't actually control the shell company: after all, it can always just decide not to renew the lease. The fact that is assumes essentially all possible risks can conveniently be ignored, so Facebook can treat it as a separate entity and doesn't have to treat the debt as its own.
So the lenders are happy because there's no real risk to them, and Facebook is happy because they can pretend a $27B loan doesn't exist. It's a win-win, except for the part where they are lying to their shareholders about not taking on a $27B loan.
It is so hopelessly depressing. I was wrapt reading it from start to finish and thoroughly enjoyed it as few recent articles at length have been.
And then going to the comments, excitedly no less, to find…this?
Jfc :’(
I’m guessing Meta isn’t the only one doing this
Right.
> I should say that the big tech companies did not invent this technology to build AI data centers. This sort of thing — project finance, non-consolidated joint ventures, borrowing out of boxes — has a long history in a lot of capital-intensive industries.
Levine attributes a recent increase to private credit.
You would guess right, and I have even heard that this sort thing has been standard practice for a long time, without nefarious intent.
The problem is that even standard practice, without nefarious intent, can cause massive financial collapse. If, say, the vast majority of economic growth were being focused into such vehicles, the lack of transparency could make people misanalyze the situation and result in bad valuations that collapse when it all becomes transparent.
Can anyone comment about how common this (apparently legal) practice is?
Setting up a separate company for a major construction project is so common that it would be surprising to hear someone didn’t do it. The structure of the OP makes it hard to understand if there’s some more specific aspect he’s objecting to.
About as common as breathing.
Just had chatgpt explain this to me. The article is unreadable for me.
Had the same issue. This is what Claude 4.5 Opus gave me:
This is actually a satirical piece, written as a fake credit rating report. It's mocking how Meta (Facebook's parent company) is using a complex financial structure to keep $27 billion in debt off its official books.
Here's what's actually happening in plain English:
The basic setup:
Meta is building a massive $28 billion data center in Louisiana
Instead of borrowing the money directly (which would show up as debt on Meta's financial statements), they created a convoluted structure with multiple shell companies and a partner called Blue Owl Capital
The trick:
On paper, Blue Owl's company "Beignet" owns 80% of the project and borrows the $27 billion
But Meta still guarantees all the rent payments, covers cost overruns, and promises to pay if anything goes wrong
So economically, it's Meta's debt—they're on the hook for everything—but legally it's structured so it doesn't appear on Meta's balance sheet
Why the author thinks it's absurd:
Meta controls the project, uses the buildings, guarantees all payments, and bears all the real risk
The only reason it's "not Meta's debt" is a technicality in accounting rules
The author is essentially saying: "This is obviously Meta borrowing $27 billion with extra steps, and everyone pretends otherwise because the rules allow it"
The whole piece is written as if a rating agency is giving this deal an A+ grade while openly admitting the structure is ridiculous—it's a critique of how financial engineering and accounting rules let big companies hide their true debt levels.
Practicing a skill when it becomes challenging is exactly how you improve the skill. Giving up on it is how you stagnate.
It's probably unreadable because you have to understand the underlying financial discussion.
remember that time Facebook spent $10s of billions on the metaverse?
They continue to spend $4B/quarter on this as of 2025Q3 financials.
> The Outlook is Superficially Stable, defined here as “By outward appearances stable unless, you know, things happen. Then we’ll downgrade after the shit hits the fan.”
I asked ChatGPT to make this more readable since it's a mix of satire and actual information:
(Clarification: I used a diabrowser.com feature to clarify the article, which uses ChatGPT underneath)
==============
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.
If the llc declares bankruptcy does meta have to pay the bank for it - or can they buy the assets at fire sale prices?
I have skimmed through the article and if I get the details through all the humor, satire and sarcasm even remotely correct, the major assets are actually the duality of payment obligations and residual value guarantees, both from meta. One could include cost overrun protection at the construction time too.
The "fire sale prices" would be so delicious as to guarantee that the entity(-ies) involved stay solvent as long as meta stays solvent.
My personal experience with LLC loans and banks is that the bank is using the assets as collateral and me as a backstop.
I thought the whole point of LLC was to limit liability so you wouldn't be liable for debt beyond your paid up capital? Why would you ever sign a personal guarantee?
The liability I’m shielded from is not debt I specifically requested. I’m shielded from unknown events.
banks are not stupid… you can’t just open LLC, borrow billion bucks, spend it and then be like “oops, LLC mates, not liable”
You can if you are Meta and are willing to litigate the hell out of it.
Meta doesn't actually owe the bank anything in this setup. That would be Blackrock and the other private creditors.
Mechanistically, how would the LLC achieve bankruptcy?
you just... file for bankruptcy like any other person or corporation?
Yeah but when you come to bankruptcy court with significantly more assets than debt, they aren't going to let you sell the business for pennies.
I'm asking how you would believe this vehicle would go broke, which is the usual reason to go to bankruptcy.
Corporate bankruptcy happens for a lot of reasons other than being "broke". Chapter 11 is a court-supervised way of restructuring your debt. This has a lot of utility in many situations other than not being able to pay.
A lot of comments praising this summary, but I'll criticize it: it's still too verbose, and misses the point.
Meta wants to fund this project, but doesn't want the debt on own its books (because it would impact its vanity AA credit rating). Debt investors are happy to finance a special purpose vehicle guaranteed (in a non debt way) by Meta at a credit rating almost as good as Meta's (say, A). No one is confused this is Meta getting financing for their own project; they've just put it in a wrapper for vanity credit score reasons.
Levine wrote about it and his writing is better than ChatGPT, this snarky website, and obviously mine: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put... .
So… ‘vanity’ ratings… what’s the point of them then.
Still too verbose. Here's a TL;DR.
Meta is borrowing a whole lot of money and they're lying about it to investors.
No one is lying or deceived here.
Ehh, tell me the credit ratings assigned by rating agencies to mortgage backed securities circa 2005-2007. Its an ecosystem with misaligned incentives, and some cohort of investor will be left holding the bag. Big Tech, investment banks, and ratings agencies will get off with no consequences when this Jenga-esq capital apparatus eventually collapses.
It’s not necessarily lying, but it’s certainly deceptive.
Thank you, I actually understand what this is all about now.
They can get a better interest rate by using a specialty data center lender.
This is hilarious because I was at the Louisiana public utility commission meeting where the argument was basically it’s Meta borrowing the money so they’re good for it.
Very useful, ty
"None of this is unusual except for the part where Meta designs, builds, guarantees, operates, funds the overruns, pays the rent, and does not consolidate it."
So ChatGPT put this sentence in list form and reordered it a bit. AGI is imminent!
This might be the first time an explicit ChatGPT response survived being the top comment
I personally think it’s a great response and makes it clearer what’s happening
Times are changing quickly!
One year ago was taboo to say you were using LLM to help you code, today is the other way around...
> today is the other way around...
It is definitely not taboo to say you’re writing your own code.
could get you fired in more and more places though… :)
This isn’t to code. It’s tk summarize - something LLMs are usually good at, since they’re essentially lossy text/knowledge compression at their root.
Yeah... no it's not.
This is testable:
Can you link to another one?
[dead]
Is Meta actually obligated to repay the loans or not?
That’s how you can decide if this is disingenuous or not. If Meta is obligated to repay the loan and used to synthetic means to get it off the balance sheet that’s a problem.
If they have in fact successfully transferred risk to other parties then that’s what deals like this are for. It’s the whole reason the concept of limited liability exists.
I am fully willing to believe it’s the former. But that’s the test.
I don't think Meta has a debt relationship with the loans involved here; that's the point. It does have strong contractual obligations to the wrapper business, though.
Even if they aren't obligated to repay, they have to in practice because it'll impact their ability to get loans in the future. If the shell company declares bankruptcy and gets the loans off Meta's books no one will ever loan money to Meta again.
They would still be able to get loans, but the terms would be much worse.
Basically, if we’re reading about it from substacks and Matt Levine’s newsletter then it’s already fully common knowledge in the finance world.
Eh, debt investors have short memories. They buy 100 year bonds from Argentina, for fuck's sake. It might limit Meta's ability to do this SPV trick.
There are better articles explaining this: https://www.forbes.com/sites/petercohan/2025/11/25/metas-ai-... and https://www.wsj.com/tech/meta-ai-data-center-finances-d3a6b4...
LOL "The entity is named “Beignet,” presumably because “Off-Balance-Sheet Leverage Vehicle No. 5” tested poorly with focus groups."
Meta's accounting games are entirely reminiscent of Enron, who famously named their off-balance sheet debt-hiding special purpose vehicles after Star Wars "Jedi 1, Jedi 2," Jurassic Park, "Raptors 1 through 7," and the crooked CFO's kids "LJM" etc.
It’s a fitting name for Louisiana at least. But this place is next Monroe which is…nowhere near New Orleans.
This entire thing was a masterpiece I love it.
It definitely has the Voltaire/Onion like snark and cynicism with biting accuracy that really gets me going. We need more well informed rants disguised in heavy sarcasm
> This treatment is considered acceptable because the people who decide what is acceptable have accepted it.
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.
The 2008 crash was in part caused by inaccurately rating synthetic bundles of subprime mortgage debt as extremely low risk (e.g. AAA). Subprime borrowers had a much higher risk of defaulting than a AAA rating implied.
On the other hand, Meta has great creditworthiness. And guarantees this vehicle. So... it's not the same.
Isn’t part of its creditworthiness how much debt it’s carrying? And if it’s shifting that off of its balance sheet, then it appears in better shape than it actually is.
This time is different because this stuff is all tied into centralized economic planning by the orange one, and it’s unclear if we’ll continue to hold elections after he crashes the economy and declares a national state of emergency.
This is hardly a secret. Matt Levine blogged about it: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put...
Does it need to be a secret to be noteworthy, especially if it’s apparently working despite not being a secret anymore?
I meant to say it's not new information. The blog post I linked is from a month ago. It is also more accessible for casual reading.
Relevant excerpts to understand what's at play here:
> (…) 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.
Levine wrote about this here: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put... .
Monroe LA is the former headquarters of Lumen, they realized that their corporate headquarters was a white elephant and donated it to the local university I think. However that means there is available power capacity from the local power company and of course, fair amounts of fiber optic cable nearby.
Unfortunately I didn't find a mention of any mathematical geometry in the article.
It’s buried in the article but this about a debt vehicle created to finance a “2.064 GW hyperscale data center campus”. That’s approximately equivalent to a One-Third-Gorges Dam (one tenth of the Three Gorges Dam.)
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?
> 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?
Mostly things like this, yeah. The hyperscalers don't want to get into the power business.
> One-Third-Gorges Dam (one tenth of the Three Gorges Dam.)
Pedantically, that's one ninth of the Three Gorges Dam. One tenth would be the 0.3 Gorges Dam.
It seems to me that the lengthiness and opacity of the report is part of the joke, and therefore running it through ChatGPT kind of misses the point. (The "FSG analyst" would have intentionally spread a layer of BS on top of everything to make it a lot of extra work to understand that the debt should actually be on Meta's books. Of course it's satirical so it calls out its own absurdity instead of actually burying it.)
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-...
Folks in the comments here begging ChatGPT to teach them how to read
This article is poorly written. It’s so desperate to be clever and edgy that it’s hard to get the facts out of it.
ChatGPT isn’t really a solution because the source is both low quality and has questionable motives. Going to any of the other good articles on the subject that have been linked in this comment section is much better.
this is the future of human-written articles - they will obligatory be written like this as 99% of article comments on HN these days is “oh, this is AI written.” :)
It is not the reader's fault if the article is unreadable in the first place.
Not to mention that asking help to explain a text is extremely common. I can read English, but I have never read a US supreme court ruling. There are much better ways for me to understand those rulings to me as a non-lawyer.
Many SCOTUS opinions, especially the major ones, are very readable! The justices and clerks are excellent writers.
The most publicly notable cases (on things like abortion, gerrymandering, gun control, etc.) aren’t so tied down in complex precedent or laws the average person is unfamiliar with.
Although, even some of those (like, for me, issues around Native American sovereignty or maritime law) are quite readable as well.
The difficulty understanding this piece comes from lack of knowledge about finance and ratings, not from an inability to read. The blog assumes a large amount of financial knowledge which is not common among the HN audience.
It seems fairly understandable even without financial knowledge?
1. Facebook creates a shell company.
2. The shell company borrows billions of dollars, and builds a data center.
3. Facebook leases the data center.
4. The fact that it is technically only a four-year lease with only one possible tenant can conveniently be ignored, as Facebook assumes essentially all possible risks. The shell company could only possibly lose money if Facebook itself goes under, so the lenders can treat the loan as just as reliable as Facebook itself.
5. Because Facebook technically only has a four-year lease, it can pretend it doesn't actually control the shell company: after all, it can always just decide not to renew the lease. The fact that is assumes essentially all possible risks can conveniently be ignored, so Facebook can treat it as a separate entity and doesn't have to treat the debt as its own.
So the lenders are happy because there's no real risk to them, and Facebook is happy because they can pretend a $27B loan doesn't exist. It's a win-win, except for the part where they are lying to their shareholders about not taking on a $27B loan.
It is so hopelessly depressing. I was wrapt reading it from start to finish and thoroughly enjoyed it as few recent articles at length have been.
And then going to the comments, excitedly no less, to find…this?
Jfc :’(
I’m guessing Meta isn’t the only one doing this
Right.
> I should say that the big tech companies did not invent this technology to build AI data centers. This sort of thing — project finance, non-consolidated joint ventures, borrowing out of boxes — has a long history in a lot of capital-intensive industries.
Levine attributes a recent increase to private credit.
https://www.bloomberg.com/opinion/newsletters/2025-10-29/put...
You would guess right, and I have even heard that this sort thing has been standard practice for a long time, without nefarious intent.
The problem is that even standard practice, without nefarious intent, can cause massive financial collapse. If, say, the vast majority of economic growth were being focused into such vehicles, the lack of transparency could make people misanalyze the situation and result in bad valuations that collapse when it all becomes transparent.
Can anyone comment about how common this (apparently legal) practice is?
A couple thousand of them in the US https://carta.com/data/spv-spotlight-q3-2024/
MBAs gotta have something to do.
Setting up a separate company for a major construction project is so common that it would be surprising to hear someone didn’t do it. The structure of the OP makes it hard to understand if there’s some more specific aspect he’s objecting to.
About as common as breathing.
Just had chatgpt explain this to me. The article is unreadable for me.
Had the same issue. This is what Claude 4.5 Opus gave me:
This is actually a satirical piece, written as a fake credit rating report. It's mocking how Meta (Facebook's parent company) is using a complex financial structure to keep $27 billion in debt off its official books. Here's what's actually happening in plain English: The basic setup:
Meta is building a massive $28 billion data center in Louisiana Instead of borrowing the money directly (which would show up as debt on Meta's financial statements), they created a convoluted structure with multiple shell companies and a partner called Blue Owl Capital
The trick:
On paper, Blue Owl's company "Beignet" owns 80% of the project and borrows the $27 billion But Meta still guarantees all the rent payments, covers cost overruns, and promises to pay if anything goes wrong So economically, it's Meta's debt—they're on the hook for everything—but legally it's structured so it doesn't appear on Meta's balance sheet
Why the author thinks it's absurd:
Meta controls the project, uses the buildings, guarantees all payments, and bears all the real risk The only reason it's "not Meta's debt" is a technicality in accounting rules The author is essentially saying: "This is obviously Meta borrowing $27 billion with extra steps, and everyone pretends otherwise because the rules allow it"
The whole piece is written as if a rating agency is giving this deal an A+ grade while openly admitting the structure is ridiculous—it's a critique of how financial engineering and accounting rules let big companies hide their true debt levels.
The Matt Levine article on this financing is more readable: https://news.bloomberglaw.com/mergers-and-acquisitions/matt-...
Practicing a skill when it becomes challenging is exactly how you improve the skill. Giving up on it is how you stagnate.
It's probably unreadable because you have to understand the underlying financial discussion.
remember that time Facebook spent $10s of billions on the metaverse?
They continue to spend $4B/quarter on this as of 2025Q3 financials.
> The Outlook is Superficially Stable, defined here as “By outward appearances stable unless, you know, things happen. Then we’ll downgrade after the shit hits the fan.”