Meta Platforms Inc. sold $25 billion of corporate bonds on Election Day, Tuesday, Nov. 3, as US voters went to the polls. The company, the Facebook parent, judged that waiting carried more risk than launching the offering during the unusual timing. The move came as a sweeping victory by Democrats in the midterms threatened to make financing artificial intelligence investment more difficult and expensive, raising fears that a Democratic majority in Congress could slow AI development and cut into cash flow for data center projects.
Money managers had already grown wary of the debt piling up at big tech companies known as hyperscalers. Jack Daley, a portfolio manager at Twenty Four Asset Management, said investors are demanding a higher premium and much greater clarity on how enormous AI capital expenditure will translate into revenue and free cash flow. Hyperscalers have started guiding the market more on deal timing and when positive free cash flow will return. Oracle Corp. assured investors it was borrowing only $10 billion and paid yields 0.35 percentage point above its existing debt levels.
Meta had been looking to borrow after being largely shut out of the market by a quiet period before earnings. A $25 billion sale from Microsoft Corp. later in October complicated its plans, and Alphabet sold €6 billion ($6.7 billion) of notes on the same day Oracle borrowed. Citigroup Inc. and Morgan Stanley helped Meta choose the Tuesday window, with the euro deal to follow on Wednesday. Meta's bankers pitched roughly 500 institutional investors, and CFO Susan Li joined some calls.
The timing worked, but the borrowing was not cheap. Notes due in 2056 priced at a yield premium of 2.2 percentage points above Treasuries, almost 0.9 percentage point wider than a comparable Meta note sold in April. The bond sale was one part of a broader fundraising push that also included $25 billion of common stock and $12.5 billion from preferred shares.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing