Meta Debt: Tech Giant Targets $25 Billion Bond Sale

Meta Platforms is preparing to raise between $20 billion and $25 billion through a new bond issuance on Tuesday. The company intends to allocate two-thirds of the proceeds in U.S. dollars and the remaining one-third in euros. Sources familiar with the private details indicated that final pricing for the debt instruments would be determined during Tuesday afternoon.

The capital raise supports a sharp increase in spending for artificial intelligence models, services, and underlying infrastructure. Meta disclosed in its third-quarter earnings report that full-year capital expenditure will fall between $135 billion and $145 billion. This figure represents a $5 billion increase at the low end compared to its previous guidance.

The bond offering follows a recent downgrade of the company's credit outlook. S&P Global Ratings changed its outlook from AA- stable to AA- negative, citing uncertainty regarding high capital spending and negative free cash flow. Meta reported a free cash flow deficit of $2.12 billion for the latest quarter, aligning with similar figures reported by Alphabet and Amazon.

Meta is actively raising capital through multiple channels to fund its AI initiatives. The company announced last week that it plans to raise a total of $95 billion. This amount includes $35 billion from underwritten public equity offerings and an additional $60 billion via an at-the-market program. A previous $25 billion bond sale occurred in April.

Market reaction to the news has been mixed but positive on the day of the announcement. Meta shares climbed 2.7% on Tuesday, reversing a recent downward trend. The stock had fallen in 12 of the previous 14 trading sessions and finished October with its worst monthly performance in four years. Meta declined to provide additional comment on the specific terms of the new debt sale.