Meta is seeking to raise at least $15bn through a US dollar bond offering, its first debt issuance in six months, as the technology company turns to the debt market amid growing investor concerns over Big Tech’s rising artificial intelligence spending.
The offering, which includes the company’s first euro-denominated bond, is expected to raise at least $20bn across the two currencies, Bloomberg reported on Tuesday, citing people familiar with the transaction.
Meta is offering investors higher yields to attract demand, with its 30-year dollar bonds marketed at about 2.5 percentage points above comparable US government debt.
The premium represents an increase of nearly 0.9 percentage points over the initial pricing of a similar bond issued by the company in April, reflecting the rising borrowing costs facing major technology companies.
This represents an increase of nearly 0.9 percentage points from the initial pricing of a similar bond Meta issued in April, highlighting the higher borrowing costs facing technology companies as investors become more cautious about the growing wave of AI-related debt.
“We see no need to chase it in the new issue market,” said Ross Pamphilon of Impax Asset Management.
He expects Meta and other major technology companies to continue spending heavily on artificial intelligence infrastructure and development until at least 2027.
Big Tech companies have issued nearly $430bn in high-grade bonds since last year, with their debt now trading at the widest premium over other highly rated corporate bonds since 2003.
The trend has been reflected in recent fundraising activities, with Alphabet paying higher borrowing costs for its €6bn euro bond sale on Monday, following Microsoft’s $25bn debt issuance last week.
Meta is also raising funds through the equity market. Last week, the company priced a $25bn common stock offering and $12.5bn in preferred shares as part of its record-breaking capital raise.
