Meta Platforms began marketing US dollar bonds in five tranches on 3 November, returning to the market after six months as it raises money for AI infrastructure, Bloomberg reported.
Key points
- The dollar notes being marketed run from five to 30 years.
- Meta is considering at least $20 billion of dollar and euro bonds.
- The company expects full-year capital expenditure of $135 billion to $145 billion.
- Meta announced an equity fundraising plan on 26 October, before returning to the debt market.
Five dollar tranches and a potential euro sale
Meta is considering a cross-border bond offering of at least $20 billion that would include dollar- and euro-denominated debt, Reuters reported. The potential offering would add borrowing to the equity fundraising Meta announced on 26 October for its AI infrastructure investments.
The dollar notes now being marketed mature in five to 30 years. Initial pricing indications for the longest-dated tranche put its yield at about 2.5 percentage points above US Treasuries, Bloomberg reported, citing a person familiar with the sale. That is an initial indication for investors, rather than the final price at which Meta would borrow.
The potential euro bonds would mature in around four years to just over 38 years. Meta asked Citigroup and Morgan Stanley to arrange investor calls on 2 and 3 November. No final decision has been made on the bond sale, and its size could grow depending on investor demand, Reuters reported.
Meta would bear the borrowing cost on any bonds it issues. The yield indication for the longest dollar tranche gives prospective investors a starting price for that risk, while the range of maturities would spread repayment dates across several years. The final amount raised depends on the sale Meta completes.
Meta’s October equity plan
The debt discussions follow a separate plan to sell shares. Meta set the prices for a $25 billion common-stock offering and a $12.5 billion issue of mandatory convertible preference shares, Reuters reported. It also plans to raise up to $60 billion by selling shares periodically at prevailing market prices through an at-the-market programme. The planned equity fundraising was around $97.5 billion.
CNBC described Meta’s 26 October plan as a $95 billion stock offering. The initial underwritten offerings amounted to $35 billion, with a further $60 billion planned through the at-the-market programme. AI Affairs reported the $35 billion offering and planned $60 billion share sale when Meta announced them.
Meta said Nvidia, AMD and Broadcom were interested in buying up to $5 billion in shares. The company said it would finance those investments using internally generated funds, debt rated above speculative grade, arrangements with other businesses and sales of shares. The bond marketing puts that debt component before investors alongside the share offerings.
Meta raises its capital spending floor
Meta expects full-year capital expenditure of $135 billion to $145 billion, having raised the lower end of its forecast from $130 billion, CNBC reported. Its third-quarter revenue rose 26% year on year to $64.60 billion, against analysts’ expectations of $63.37 billion. Investors also focused on negative free cash flow and the higher spending forecast after those results.
The borrowing comes with scrutiny of Meta’s capacity to fund the buildout. AI Affairs reported S&P’s revision of Meta’s outlook to negative alongside its forecast of cash flow deficits. For comparison with another large technology financing, CNBC reported that SpaceX had closed a $40 billion debt financing to buy graphics processing units.
Meta said it was building four computing superclusters, each with more than 1 gigawatt of capacity. Meta plans to nearly double its total infrastructure capacity in 2026 from a year earlier.
