Meta, Facebook’s parent company, makes the first-ever bond issue

The Meta Platforms brand is seen in Davos, Switzerland Might 22, 2022. Image taken Might 22, 2022. REUTERS/Arnd Wiegmann//File Picture

Aug 4 (Reuters) – Meta Platforms, the guardian firm of Fb (META.O), introduced on Thursday that it might make its first-ever bond concern, at a time when the social media firm is making huge investments to fund its digital actuality tasks.

Though Meta didn’t disclose the dimensions of the providing, IFR Information reported that the bond sale might yield between $8.5 billion and $10 billion, citing a supply conversant in the matter.

The corporate mentioned it might use the proceeds for capital expenditures, share buybacks, acquisitions or investments.

Meta has acquired an “A1” score from Moody’s and an “AA-” score and “steady” outlook from S&P. Meta sells 4 bond tranches with maturities starting from 5 years to 40 years.

Among the many large tech firms, Meta is the one one which has no debt on its books. Tapping the market now would give him extra monetary respiration room as he tries to fund expensive overhauls, together with a wager on augmented and digital actuality know-how, traders who heard his pitch for the bid mentioned on Tuesday. obligations.

It may be a uncommon alternative to take action comparatively inexpensively within the present market setting. Company bonds rebounded final month from a rout earlier this 12 months as traders hoped the US Federal Reserve’s struggle towards inflation via speedy fee hikes was beginning to have some affect.

This week, the US investment-grade major bond market rebounded, with firms elevating greater than $38 billion, making it the eighth busiest week of the 12 months, in response to information from Informa World Markets.

Different tech giants corresponding to Apple Inc (AAPL.O) and Intel Corp (INTC.O) additionally issued bonds earlier this week, elevating $5.5 billion and $6 billion, respectively.

Bankers and traders mentioned such issuance home windows may very well be uncommon within the coming months. A banker answerable for a bond syndicate workplace at a US financial institution mentioned credit score spreads might widen later this 12 months, elevating funding prices. Learn extra

Meta’s bond concern will come after the corporate issued a grim forecast and recorded its first-ever quarterly decline in income as recession fears and aggressive pressures weighed on its digital advert gross sales. Learn extra

Its free money stream has depleted because it continues its metaverse tasks, which led to its title being modified to Fb’s Meta Platforms final 12 months.

Within the second quarter ended June 30, Meta had $4.45 billion in free money stream, in comparison with $8.51 billion a 12 months in the past and $8.53 billion within the prior quarter.

Chief Monetary Officer Dave Wehner mentioned on his most up-to-date earnings convention name that the corporate has a “substantial quantity” in its buyback program and plans to proceed share buybacks as a part of its allocation technique. capital.

Reporting by Nivedita Balu in Bengaluru and Shankar Ramakrishnan; Modifying by Saumyadeb Chakrabarty and Paritosh Bansal

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