Meta Platforms raised $15bn from a five-part sale of dollar bonds on Tuesday, its latest move to finance what it calls "accelerating investments in AI infrastructure". The offering included $3.25bn of notes due 2031 with a coupon of 5.85 per cent and $3.25bn due 2033 at 6.25 per cent, according to Reuters.
The sale follows a $25bn bond issue in April and a $30bn offering last year. Only days earlier Meta expanded plans for an equity raise that could reach $97.5bn, the largest in its history. As of 30 September the company carried $83.7bn of debt, according to LSEG data.
Spending outruns cash
The money is needed because Meta's spending now exceeds what its advertising business generates. The company expects capital expenditure of $135bn to $145bn this year, mostly on data centres and chips for artificial intelligence. In the third quarter its free cash flow turned negative, at minus $2.12bn, for the first time in more than a decade.
Moody's rated the new bonds Aa3, saying it expects Meta to maintain "conservative financial policies" and a positive net cash position. Investors were willing buyers: high bond yields, with the ten-year Treasury yield near 4.9 per cent, have made new corporate debt attractive to lenders.
A test of patience
The scale of the borrowing is becoming a market story in its own right. Wells Fargo estimates that about a third of capital spending in this AI cycle has been funded with debt, including off-balance-sheet arrangements. After last month's results, the cost of insuring Meta's debt against default reached a record, and its shares fell about 7 per cent.
For now, lenders and shareholders are still writing the cheques. The question is how long they will keep doing so before the investment starts to pay for itself.
