Meta Platforms has become the first major technology firm to enter the US investment-grade bond market amidst ongoing financial sector unrest that has seen five banks collapse since March.
The tech giant, which disclosed its earnings last week, aims to secure $7 billion (approximately Rs. 57,250 crore) through a five-part bond offering, according to a source familiar with the situation. The offering’s longest segment is expected to be a 40-year bond, potentially yielding 215 basis points above Treasury rates, the source indicated.
On Monday, eleven companies initiated bond offerings as they seek to issue debt prior to the Federal Open Market Committee’s meeting and subsequent interest rate announcement scheduled for Wednesday.
Last year, Meta raised $10 billion (about Rs. 81,790 crore) during its initial corporate bond issuance. The parent company of Facebook intends to utilize the new capital to finance capital expenditures, repurchase existing shares, and pursue acquisitions or investments, according to the source.
Based in Menlo Park, California, Meta has spent recent months streamlining operations and restructuring its workforce, while also witnessing a rebound in advertising sales during the first quarter. Despite its robust cash flow, the company appears to be taking precautions to maintain liquidity for future bond repurchases, as noted by Bloomberg Intelligence analyst Robert Schiffman.
In a recent analysis, Schiffman stated, “Following the $40 billion (nearly Rs. 3,27,160 crore) increase in repurchase authorization in January, we anticipate shareholder returns will continue to rise — akin to what we see with Alphabet and Apple — as free cash flow forecasts improve.” He added, “Given the initial pricing discussions are broad compared to competitors, we perceive minimal credit risk and strong relative value along the curve.”
Representatives from Meta did not provide immediate comments when approached for insights.
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