Meta borrows again, and pays up for it
Meta has gone back to the bond market, and this time investors made it pay.
The Facebook owner sold $15bn of US dollar bonds in five parts on Tuesday, according to its pricing term sheet filed with the SEC. Coupons run from 5.85 per cent on notes due 2031 to 7.5 per cent on 30-year notes due 2056. On Wednesday it opened its first ever sale of euro bonds, seeking up to €9bn in six tranches, according to Reuters and Bloomberg.
Record demand, higher price
The euro deal drew about €53bn of orders, a record for a corporate bond in Europe, according to Bloomberg data. But Meta paid for it. Its six-year euro tranche was set at 140 basis points over swaps, against 90 basis points for a similar Alphabet bond on Monday.
Bids for the dollar deal reportedly reached as much as $58bn.
Why Meta needs the money
Meta expects to spend $135bn to $145bn on capital projects this year, mostly AI data centres, and reported negative free cash flow of $2.12bn in its latest quarter, CNBC reported. S&P Global Ratings recently moved its AA- rating outlook to negative, citing uncertainty about that spending.
The company raised $25bn in bonds in April and said last week that it plans to raise $95bn more, including $35bn in underwritten share sales.
The shares had their worst month in four years in October. For bond buyers the question for bond buyers is no longer whether big tech can borrow. It is how much extra yield they should demand to fund the AI build-out.
*Image: Meta Platforms headquarters in Menlo Park, California. Photo: LPS.1 / Wikimedia Commons, CC0*
