Meta’s debut euro bond sale draws record orders

Meta Platforms ↗ 2.57% raised $15 billion on Tuesday, November 3, in a five-part US dollar bond sale to help pay for its artificial intelligence infrastructure, Reuters reported. Investors placed as much as $58 billion in orders, about 3.9 times the deal size, according to Bloomberg. The demand was strong, but Meta paid noticeably more to borrow than it did in April. The dollar notes are the largest part of a cross-border financing expected to total at least $20 billion, Briefs reported.reuters.com+2

Higher borrowing costs

The deal includes $3.25 billion of notes due 2031 with a 5.85% coupon and $3.25 billion due 2033 at 6.25%, according to a regulatory filing cited by Reuters. The rest is $4 billion due 2036 at 6.55%, $1.75 billion due 2046 at 7.35%, and $2.75 billion due 2056 at 7.50%, Yahoo Finance reported. The 2056 notes were sold at 99.629% of face value, which gives buyers a yield of about 7.53%, 24/7 Wall St. reported.finance.yahoo.com+2

The 30-year bonds priced 2.2 percentage points over Treasuries. That was tighter than the initial guidance of 2.5 points, but almost 0.9 points wider than similar bonds Meta issued in April, Financial News reported. The wider spread reflects growing investor caution about the volume of AI-related debt coming from Big Tech, The Next Web noted. Moody's ↗ 5.09% rated the new debt Aa3, saying it expects Meta to keep conservative financial policies and a positive net cash position even as AI spending rises. S&P Global ↗ 3.56% rates the notes AA- with a negative outlook, according to 24/7 Wall St.247wallst.com+3

Euro debut follows

On Wednesday, Meta followed up with its first euro-denominated bond sale, a six-part offering with maturities from about four to 38 years, Bloomberg reported. It is also Meta's first bond sale outside the US. Citigroup ↗ 1.78% and Morgan Stanley ↗ 3.55% are managing the deal. According to LSEG data, Meta is aiming to raise 8.25 billion euros, or about $9.23 billion, Dow Jones reported. Bloomberg reported that the euro sale drew a record 53 billion euros in orders, according to MT Newswires.bloomberg.com+2

Funding the AI buildout

Meta sold $25 billion of investment-grade bonds in April and $30 billion last year. The latest debt sale also comes days after the company expanded plans for an equity raise that could reach $97.5 billion, Reuters reported. Meta expects capital expenditures of $135 billion to $145 billion this year, mostly driven by AI. Its total debt stood at $83.67 billion as of September 30, according to LSEG data.reuters.com