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Meta Debuts in Fixed Income Markets in Four Parts

Meta Platforms, one of the few S&P 500 companies with no debt, debuted on the US fixed income market on August 4th.

The social media giants, which include Facebook and Instagram, sell bonds in up to four parts, according to people familiar with the matter.

Meta may sell between $8 billion and $10 billion of debt, depending on demand, and the proceeds will be used for general corporate purposes such as capital expenditures, stock buybacks, acquisitions and investments.

According to last week’s earnings call, the company used cash to repurchase its shares, including $5.1 billion in the second quarter of this year, and was able to buy back $24.3 billion as of June 30.

Unlike many of the big tech companies that have a lot of cash and have borrowed heavily at low interest rates, Meta has historically stayed away from the bond market. It’s one of 18 companies in the S&P 500 with no short-term or long-term outstanding debt, other than lease obligations, as of its most recent quarter, according to data compiled by Bloomberg.

The deal comes after other tech companies such as Apple and Intel have surged in the credit market over the past month to sell bonds. Companies are taking advantage of more attractive prices and windows of stability that may not be sustainable to issue bonds.

S&P Global Ratings gave Meta an AA-investment grade rating on Wednesday, while Moody’s Investors Service downgraded the tech giant a notch to A1.

Moody’s said in a report, “The A1 Issuer Rating is based on Meta’s strong credit profile, which reflects the platform brand’s leading global position in social networking and its extensive user base. supported,” Moody’s said in a report.

Meta’s stance on debt may have changed depending on business conditions. The company announced quarterly revenue declines year-over-year for the first time, citing uncertainty in the digital advertising market that has driven growth for years.

The company is concerned that young people are abandoning the ByteDance TikTok platform. And then there’s the big, expensive ambition to build an entirely new version of the internet in the Metaverse, the immersive virtual reality world envisioned by CEO Mark Zuckerberg.

With Morgan Stanley, JPMorgan Chase, Bank of America and Barclays managing bond sales, Meta and the banks made a series of phone calls to bond investors to pitch the sale, the people said.

https://gulfbusiness.com/meta-makes-bond-market-debut-with-four-part-offering/ Meta Debuts in Fixed Income Markets in Four Parts

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