Fb’s father or mother meta makes its first bond providing

The Meta Platforms logo is seen in Davos, Switzerland, May 22, 2022. Image taken May 22, 2022. REUTERS / Arnd Wiegmann // File Photo

Sign up now for FREE unlimited access to Reuters.com

August 4 (Reuters) – Facebook Parent Meta Platform (META.O) on Thursday said it would conduct its first bond offering, at a time when the social media company is making big investments to fund its virtual reality projects.

While Meta did not disclose the size of the offering, IFR News reports the bond sale could raise between $8.5 billion and $10 billion, citing a source familiar with the matter.

The company said it will use the proceeds for capital expenditures, share buybacks, acquisitions or investments.

Sign up now for FREE unlimited access to Reuters.com

Meta has received an ‘A1’ rating from Moody’s and an ‘AA-‘ rating and a ‘stable’ outlook from S&P. Meta is selling four tranches of bonds with maturities ranging from 5 years to 40 years.

Among the big tech companies, Meta is the only one that doesn’t have any debt on its books. Tapping the market will now give it more financial room as it tries to fund some costly overhauls, including bets on augmented and virtual reality, investors heard a presentation on Tuesday’s bond offering.

It can also be a rare opportunity to do so relatively cheaply in the current market environment. Corporate bonds have rebounded over the past month after a price drop earlier this year, as investors hoped the US Federal Reserve’s fight against inflation through rapid interest rate hikes was beginning. The head has some impact.

The U.S. investment grade primary bond market rebounded this week, with companies raising more than $38 billion, making it the eighth-busiest week of the year, according to Informa Global Markets data.

Other tech giants like Apple Inc (AAPL.O) and Intel Corp (INTC.O) also issued bonds earlier this week, raising $5.5 billion and $6 billion respectively.

Bankers and investors say such issuances are likely to be rare in the coming months. A banker in charge of the bond supply desk at a US bank said credit spreads could widen later this year, increasing funding costs. read more

Meta’s bond issuance will come after the company gave a dismal forecast and posted its first drop in quarterly revenue, with recession fears and competitive pressure weighing on ad sales. corporate digital report. read more

Its free cash flow dried up when it pre-charged metaverse plans, which led to Facebook changing its name to Meta Platforms from Facebook last year.

For the second quarter ended June 30, Meta had free cash flow of $4.45 billion, compared with $8.51 billion a year ago and $8.53 billion in the previous quarter.

Chief Financial Officer Dave Wehner said on his most recent earnings conference call that the company already has a “significant amount” of money in its buyback program and expects further acquisitions. equity as part of a capital allocation strategy.

Sign up now for FREE unlimited access to Reuters.com

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

Our standards: Thomson Reuters Trust Principles.

Leave a Comment