Investment-Grade Private Credit: How Blue-Chip Corporates Finance Multi-Billion-Dollar Projects Off Balance Sheet
January 2026
The Paradox of Cheap Money
Investment-grade corporates like Intel, Oracle, and Rogers—companies with ready access to cheap bond financing—are increasingly turning to private credit for their largest capital projects. This might seem counterintuitive. Why would a company rated A or BBB, capable of issuing bonds at 4-5%, pursue complex structured arrangements with private credit giants like Apollo, Blackstone, and Brookfield?
The answer lies in a fundamental shift in corporate finance strategy. Today’s mega-projects—AI data centers, semiconductor fabrication plants, energy transition infrastructure, and telecommunications networks—require multi-billion-dollar commitments that can strain even the strongest balance sheets. Traditional bond issuance, while cheap and efficient, adds debt to the balance sheet, potentially triggering rating downgrades and constraining financial flexibility for future needs.
Enter investment-grade private credit: a sophisticated financing structure that allows corporates to access substantial capital at a debt-like cost while not having to consolidate the capital raise as debt from an accounting or credit rating perspective.
Value of International Investment Project Announcements in Selected Sectors (Percentage Change, 2023-2024)
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UN Trade and Development (UNCTAD)
The Paradox of Cheap Money
Investment-grade corporates like Intel, Oracle, and Rogers—companies with ready access to cheap bond financing—are increasingly turning to private credit for their largest capital projects. This might seem counterintuitive. Why would a company rated A or BBB, capable of issuing bonds at 4-5%, pursue complex structured arrangements with private credit giants like Apollo, Blackstone, and Brookfield?
The answer lies in a fundamental shift in corporate finance strategy. Today’s mega-projects—AI data centers, semiconductor fabrication plants, energy transition infrastructure, and telecommunications networks—require multi-billion-dollar commitments that can strain even the strongest balance sheets. Traditional bond issuance, while cheap and efficient, adds debt to the balance sheet, potentially triggering rating downgrades and constraining financial flexibility for future needs.
Enter investment-grade private credit: a sophisticated financing structure that allows corporates to access substantial capital at a debt-like cost while not having to consolidate the capital raise as debt from an accounting or credit rating perspective.
Value of International Investment Project Announcements in Selected Sectors (Percentage Change, 2023-2024)
Click to find out more
UN Trade and Development (UNCTAD)
What Is IG Private Credit?
At its core, IG private credit involves structured joint ventures where corporates sell minority stakes in specific assets or projects to private credit investors. But the innovation lies in what happens next.
The investor creates a special purpose vehicle (SPV) that raises investment-grade rated notes secured solely on its minority equity stake in the joint venture. This technique, known as “back leverage,” transforms what appears to be an equity investment into a highly engineered financial structure that delivers debt-like returns to the private credit fund while maintaining equity-like treatment for the corporate.
This approach differs fundamentally from both traditional IG bonds—which are cheap and fast but fully on balance sheet—and project finance, which involves asset-level debt with liens on the underlying assets. The IG private credit structure occupies a middle ground: it provides substantial capital without the balance sheet impact of conventional debt, yet offers corporates more control than traditional project finance.
What Is IG Private Credit?
At its core, IG private credit involves structured joint ventures where corporates sell minority stakes in specific assets or projects to private credit investors. But the innovation lies in what happens next.
The investor creates a special purpose vehicle (SPV) that raises investment-grade rated notes secured solely on its minority equity stake in the joint venture. This technique, known as “back leverage,” transforms what appears to be an equity investment into a highly engineered financial structure that delivers debt-like returns to the private credit fund while maintaining equity-like treatment for the corporate.
This approach differs fundamentally from both traditional IG bonds—which are cheap and fast but fully on balance sheet—and project finance, which involves asset-level debt with liens on the underlying assets. The IG private credit structure occupies a middle ground: it provides substantial capital without the balance sheet impact of conventional debt, yet offers corporates more control than traditional project finance.
Why Corporates Are Embracing This Structure
For treasury teams at major corporates, IG private credit solves several strategic challenges simultaneously:
Off-Balance Sheet Treatment: The transaction appears as an equity sale rather than debt issuance, preserving debt capacity and credit ratios. For a company contemplating a $5 billion semiconductor facility or data center buildout, this distinction can mean the difference between maintaining an A rating or facing a downgrade.
Operational Control: Unlike traditional project finance or asset sales, the corporate retains operational control of the joint venture assets. This is critical for strategic assets like manufacturing facilities or network infrastructure where operational decisions directly impact the broader business.
Rating and Accounting Optimization: The structure threads the needle between debt-like economics and equity-like treatment. While the corporate receives substantial upfront capital and the investor expects predictable returns, careful structuring ensures rating agencies treat the arrangement as equity rather than debt.
Investor Validation: Securing investment from marquee asset-managers provides a stamp of approval, signaling to markets that sophisticated investors have conducted rigorous due diligence and view the project as viable.
Capital Efficiency for Mega-Projects: These structures are particularly suited to multi-billion-dollar projects such as data centers, fabrication plants, pipelines, and telecommunications infrastructure. They may also facilitate major M&A transactions where balance sheet capacity is constrained.
Why Corporates Are Embracing This Structure
For treasury teams at major corporates, IG private credit solves several strategic challenges simultaneously:
Off-Balance Sheet Treatment: The transaction appears as an equity sale rather than debt issuance, preserving debt capacity and credit ratios. For a company contemplating a $5 billion semiconductor facility or data center buildout, this distinction can mean the difference between maintaining an A rating or facing a downgrade.
Operational Control: Unlike traditional project finance or asset sales, the corporate retains operational control of the joint venture assets. This is critical for strategic assets like manufacturing facilities or network infrastructure where operational decisions directly impact the broader business.
Rating and Accounting Optimization: The structure threads the needle between debt-like economics and equity-like treatment. While the corporate receives substantial upfront capital and the investor expects predictable returns, careful structuring ensures rating agencies treat the arrangement as equity rather than debt.
Investor Validation: Securing investment from marquee asset-managers provides a stamp of approval, signaling to markets that sophisticated investors have conducted rigorous due diligence and view the project as viable.
Capital Efficiency for Mega-Projects: These structures are particularly suited to multi-billion-dollar projects such as data centers, fabrication plants, pipelines, and telecommunications infrastructure. They may also facilitate major M&A transactions where balance sheet capacity is constrained.
The Investor Perspective: Why Private Credit Funds Pursue These Deals
For private credit investors, IG structures offer compelling advantages that justify the complexity:
The Investor Perspective: Why Private Credit Funds Pursue These Deals
For private credit investors, IG structures offer compelling advantages that justify the complexity:
Access to Premium Assets: These deals provide private credit funds with exposure to stable, predictable cash flows from investment-grade caliber assets that are typically outside the reach of traditional private credit. Rather than lending to mid-market companies or distressed situations, they’re partnering with blue-chip corporates on strategic infrastructure.
Enhanced Returns Through Financial Leverage: The SPV finances its stake in the joint venture by issuing investment-grade notes to other investors. This financial leverage magnifies the fund’s return on equity significantly—a “buy low, borrow high” arbitrage applied to asset financing. If the fund invests $1 billion in equity but finances it with $900 million of IG notes at 5%, the leverage dramatically enhances returns on the remaining $100 million of actual equity capital.
Meeting Insurer Demand: A major driver is synergy between asset managers and affiliated insurance companies. These insurers need long-duration, stable, investment-grade assets to match their long-term liabilities. The back-leverage notes issued by the SPV are ideal for this purpose, creating a vertically integrated capital solution.
Structural Protections: Despite holding an equity stake in the joint venture, private credit investors typically benefit from debt-like features such as limited veto rights and minimum volume commitments (MVCs) that enhance downside protection. However, these commitments are made to the JV itself, not directly to the SPV, and must be carefully calibrated—too many debt-like protections could risk reclassification as debt for rating or accounting purposes.
Access to Premium Assets: These deals provide private credit funds with exposure to stable, predictable cash flows from investment-grade caliber assets that are typically outside the reach of traditional private credit. Rather than lending to mid-market companies or distressed situations, they’re partnering with blue-chip corporates on strategic infrastructure.
Enhanced Returns Through Financial Leverage: The SPV finances its stake in the joint venture by issuing investment-grade notes to other investors. This financial leverage magnifies the fund’s return on equity significantly—a “buy low, borrow high” arbitrage applied to asset financing. If the fund invests $1 billion in equity but finances it with $900 million of IG notes at 5%, the leverage dramatically enhances returns on the remaining $100 million of actual equity capital.
Meeting Insurer Demand: A major driver is synergy between asset managers and affiliated insurance companies. These insurers need long-duration, stable, investment-grade assets to match their long-term liabilities. The back-leverage notes issued by the SPV are ideal for this purpose, creating a vertically integrated capital solution.
Structural Protections: Despite holding an equity stake in the joint venture, private credit investors typically benefit from debt-like features such as limited veto rights and minimum volume commitments (MVCs) that enhance downside protection. However, these commitments are made to the JV itself, not directly to the SPV, and must be carefully calibrated—too many debt-like protections could risk reclassification as debt for rating or accounting purposes.
Transaction Mechanics: How the Structure Works
The typical IG private credit transaction follows a carefully structured sequence:
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Transaction Mechanics: How the Structure Works
The typical IG private credit transaction follows a carefully structured sequence:
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The structure incorporates several sophisticated features to balance competing interests. Minimum volume commitments are deliberately partial and time-limited (typically 65-85% coverage for 7.5 years of a 20-year note). Dividend waterfalls often give the financial investor proportionate distributions until a target IRR is achieved, but the JV board retains discretion over distributions and may reinvest proceeds rather than pay dividends. Structures feature variability and risk-sharing—waterfalls apply for limited periods, target IRRs can be missed if projects underperform, and there’s no absolute guarantee of full make-whole. Call options give the corporate partner the right—but not the obligation—to buy out the investor at a capped return rate, providing an exit mechanism while limiting the investor’s upside.
Meta JV with Blue Owl: An Example of a Scale-Driven Structure
Mega deal: The JV between Meta Platforms and Blue Owl Capital closed in October 2025 is the largest private credit package in history: a $27.3 billion financing for Project Beignet, with the project owned 80% by Blue Owl and 20% by Meta. The total project cost is $28.79 billion, with Blue Owl providing $23.03 billion for its 80% stake and Meta’s subsidiary providing $5.76 billion for the remaining 20%.
Project Beignet: The Ownership Split Between Meta Platforms and Blue Owl Capital
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Blue Owl and Meta Platforms
Meta JV with Blue Owl: An Example of a Scale-Driven Structure
Mega deal: The JV between Meta Platforms and Blue Owl Capital closed in October 2025 is the largest private credit package in history: a $27.3 billion financing for Project Beignet, with the project owned 80% by Blue Owl and 20% by Meta. The total project cost is $28.79 billion, with Blue Owl providing $23.03 billion for its 80% stake and Meta’s subsidiary providing $5.76 billion for the remaining 20%.
Project Beignet: The Ownership Split Between Meta Platforms and Blue Owl Capital
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Blue Owl and Meta Platforms
Ownership Split: This ownership split represents a departure from typical investment-grade private credit structures. Where most JVs see corporates retain majority ownership with investors taking minority stakes, Meta holds just 20% while Blue Owl controls 80%. The reason seems straightforward: scale. A $28.79 billion project financed conventionally would have materially constrained Meta’s balance sheet flexibility and potentially triggered rating concerns. The 20/80 structure allows Meta to access the strategic asset while minimizing capital deployment.
Off-balance Sheet: Despite this inverted ownership structure, the transaction follows the fundamental playbook of IG private credit in how risk is allocated so that the massive debt financing package is kept off Meta’s balance sheet, but is investment-grade rated. While the new project doesn’t appear as debt on Meta’s balance sheet, Meta disclosed in its latest results that it had leases that have not commenced “of approximately $52.56 billion,” some of which is likely related to Project Beignet.
Risk Allocation: The risk allocation mechanisms mirror other structured JVs, with Meta bearing substantially all project risks through contractual commitments rather than equity ownership. Construction risks are borne by Meta, with delay risk mitigated as the tenant will start paying rents on June 1, 2029, and cost overrun risk mitigated as Meta will pay any cost overruns beyond 105% of the fixed construction budget. Under the triple-net lease structure, the tenant will first pay a minimum rent level that will generate a flat DSCR profile of 1.12x, and will then pay base rents based on actual utilization and reimburse all operating costs. Meta provides a payment guaranty for the tenant’s rent and operating expenses obligations during both the initial term (only 4 years) and any renewed terms (up to 20 years).
Residual Value Guarantee: The transaction’s most distinctive feature—and its greatest structural tension—is the residual value guarantee (RVG) mechanism that mitigates the biggest mismatch in the structure between the 2049 maturity of the bonds and the four-year lease term from Meta: if Meta doesn’t renew, the landlord vehicle must kick off a sale process for the assets within five business days, with Meta guaranteeing a minimum value for the asset and therefore running the sale risk, such that if any lease is not renewed or terminated for convenience, the debt associated with such lease will be fully repaid through the RVG mechanism.
While the RVG mechanism is unique to this transaction, the underlying principle is consistent across all IG private credit JVs: the corporate counterparty assumes the fundamental risks of the project through various contractual instruments—whether minimum volume commitments, take-or-pay obligations, or residual value guarantees—that provide debt-like protection to investors despite the equity form of their investment.
Investment Grade: In Project Beignet, Meta’s construction guarantees, minimum rent commitments, and RVG collectively ensure that the contractual framework passes substantial credit risk to Meta during both construction and operation phases, earning a preliminary credit rating of “A+” from S&P, one notch below Meta’s AA- rating. The Meta-Blue Owl transaction demonstrates that IG private credit structures can scale to finance the world’s largest infrastructure projects while maintaining their essential characteristics: off-balance-sheet treatment for the corporate, operational control despite minority ownership, and comprehensive risk transfer through contractual mechanisms that protect investors while preserving the equity characterization critical to the structure’s viability.
Risks and Considerations
Risk-sharing between the financial investor and corporate partner is a critical feature of IG Private Credit structures. Back-leverage noteholders are structurally subordinated—they have no direct claim on assets, only on the JV equity stake held by the SPV, with limited recourse. For the financial sponsor, equity represents the “first loss” piece; if cash flows prove insufficient to service the back leverage, their equity return is impaired or wiped out first.
Corporates in these structures must manage projected cash flow concerns, as a large portion of JV cash is typically directed to the financial investor early in the project’s life, meaning corporates may not benefit from JV profits until later. Rating agency treatment remains critical, requiring close contact and iterative dialog with agencies during structuring and implementation to ensure the desired accounting and credit treatment is achieved and maintained.
Risks and Considerations
Risk-sharing between the financial investor and corporate partner is a critical feature of IG Private Credit structures. Back-leverage noteholders are structurally subordinated—they have no direct claim on assets, only on the JV equity stake held by the SPV, with limited recourse. For the financial sponsor, equity represents the “first loss” piece; if cash flows prove insufficient to service the back leverage, their equity return is impaired or wiped out first.
Corporates in these structures must manage projected cash flow concerns, as a large portion of JV cash is typically directed to the financial investor early in the project’s life, meaning corporates may not benefit from JV profits until later. Rating agency treatment remains critical, requiring close contact and iterative dialog with agencies during structuring and implementation to ensure the desired accounting and credit treatment is achieved and maintained.
The Road Ahead
IG private credit is on a growth trajectory, driven by sectors including AI infrastructure, energy transition, and aviation. This innovation bridges the gap between corporate needs for capital-efficient financing and investor demand for stable, long-duration assets. Sustainability hinges on maintaining the delicate balance between equity optics and debt economics.
As corporates face ever-larger capital requirements for strategic projects, and as asset managers seek differentiated sources of investment-grade returns, this structure is likely to become an increasingly important tool in the corporate finance toolkit.
For treasury teams, investors, and investment bankers, understanding IG private credit is no longer optional. It represents a fundamental evolution in how the world’s largest companies finance their most strategic assets.
The Road Ahead
IG private credit is on a growth trajectory, driven by sectors including AI infrastructure, energy transition, and aviation. This innovation bridges the gap between corporate needs for capital-efficient financing and investor demand for stable, long-duration assets. Sustainability hinges on maintaining the delicate balance between equity optics and debt economics.
As corporates face ever-larger capital requirements for strategic projects, and as asset managers seek differentiated sources of investment-grade returns, this structure is likely to become an increasingly important tool in the corporate finance toolkit.
For treasury teams, investors, and investment bankers, understanding IG private credit is no longer optional. It represents a fundamental evolution in how the world’s largest companies finance their most strategic assets.
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